[105th Congress Public Law 33]
[From the U.S. Government Printing Office]
<DOC>
[DOCID: f:publ33.105]
[[Page 111 STAT. 251]]
*Public Law 105-33
105th Congress
An Act
To provide for reconciliation pursuant to subsections (b)(1) and (c) of
section 105 of the concurrent resolution on the budget for fiscal year
1998. <<NOTE: Aug. 5, 1997 - [H.R. 2015]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, <<NOTE: Balanced Budget
Act of 1997.>>
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Balanced Budget Act of 1997''.
SEC. 2. TABLE OF TITLES.
This Act is organized into titles as follows:
Title I--Food Stamp Provisions
Title II--Housing and Related Provisions
Title III--Communications and Spectrum Allocation Provisions
Title IV--Medicare, Medicaid, and Children's Health Provisions
Title V--Welfare and Related Provisions
Title VI--Education and Related Provisions
Title VII--Civil Service Retirement and Related Provisions
Title VIII--Veterans and Related Provisions
Title IX--Asset Sales, User Fees, and Miscellaneous Provisions
Title X--Budget Enforcement and Process Provisions
Title XI--District of Columbia Revitalization
TITLE I--FOOD STAMP PROVISIONS
SEC. 1001. EXEMPTION.
Section 6(o) of the Food Stamp Act of 1977 (7 U.S.C. 2015(o)) is
amended--
(1) in paragraph (2)(D), by striking ``or (5)'' and
inserting ``(5), or (6)'';
(2) by redesignating paragraph (6) as paragraph (7); and
(3) by inserting after paragraph (5) the following:
``(6) 15-percent exemption.--
``(A) Definitions.--In this paragraph:
``(i) Caseload.--The term `caseload' means the
average monthly number of individuals receiving
food stamps during the 12-month period ending the
preceding June 30.
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*Note: This is a hand enrollment pursuant to Public Law 105-
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``(ii) Covered individual.--The term `covered
individual' means a food stamp recipient, or an
individual denied eligibility for food stamp
benefits solely due to paragraph (2), who--
``(I) is not eligible for an
exception under paragraph (3);
``(II) does not reside in an area
covered by a waiver granted under
paragraph (4);
[[Page 111 STAT. 252]]
``(III) is not complying with
subparagraph (A), (B), or (C) of
paragraph (2);
``(IV) is not receiving food stamp
benefits during the 3 months of
eligibility provided under paragraph
(2); and
``(V) is not receiving food stamp
benefits under paragraph (5).
``(B) General rule.--Subject to subparagraphs (C)
through (G), a State agency may provide an exemption
from the requirements of paragraph (2) for covered
individuals.
``(C) Fiscal year 1998.--Subject to subparagraphs
(E) and (G), for fiscal year 1998, a State agency may
provide a number of exemptions such that the average
monthly number of the exemptions in effect during the
fiscal year does not exceed 15 percent of the number of
covered individuals in the State in fiscal year 1998, as
estimated by the Secretary, based on the survey
conducted to carry out section 16(c) for fiscal year
1996 and such other factors as the Secretary considers
appropriate due to the timing and limitations of the
survey.
``(D) Subsequent fiscal years.--Subject to
subparagraphs (E) through (G), for fiscal year 1999 and
each subsequent fiscal year, a State agency may provide
a number of exemptions such that the average monthly
number of the exemptions in effect during the fiscal
year does not exceed 15 percent of the number of covered
individuals in the State, as estimated by the Secretary
under subparagraph (C), adjusted by the Secretary to
reflect changes in the State's caseload and the
Secretary's estimate of changes in the proportion of
food stamp recipients covered by waivers granted under
paragraph (4).
``(E) Caseload adjustments.--The Secretary shall
adjust the number of individuals estimated for a State
under subparagraph (C) or (D) during a fiscal year if
the number of food stamp recipients in the State varies
from the State's caseload by more than 10 percent, as
determined by the Secretary.
``(F) Exemption adjustments.--During fiscal year
1999 and each subsequent fiscal year, the Secretary
shall increase or decrease the number of individuals who
may be granted an exemption by a State agency under this
paragraph to the extent that the average monthly number
of exemptions in effect in the State for the preceding
fiscal year under this paragraph is lesser or greater
than the average monthly number of exemptions estimated
for the State agency for such preceding fiscal year
under this paragraph.
``(G) Reporting requirement.--A State agency shall
submit such reports to the Secretary as the Secretary
determines are necessary to ensure compliance with this
paragraph.''.
SEC. 1002. ADDITIONAL FUNDING FOR EMPLOYMENT AND TRAINING.
(a) In General.--Section 16(h) of the Food Stamp Act of 1977 (7
U.S.C. 2025(h)) is amended by striking paragraph (1) and inserting the
following:
[[Page 111 STAT. 253]]
``(1) In general.--
``(A) Amounts.--To carry out employment and training
programs, the Secretary shall reserve for allocation to
State agencies, to remain available until expended, from
funds made available for each fiscal year under section
18(a)(1) the amount of--
``(i) for fiscal year 1996, $75,000,000;
``(ii) for fiscal year 1997, $79,000,000;
``(iii) for fiscal year 1998--
``(I) $81,000,000; and
``(II) an additional amount of
$131,000,000;
``(iv) for fiscal year 1999--
``(I) $84,000,000; and
``(II) an additional amount of
$131,000,000;
``(v) for fiscal year 2000--
``(I) $86,000,000; and
``(II) an additional amount of
$131,000,000;
``(vi) for fiscal year 2001--
``(I) $88,000,000; and
``(II) an additional amount of
$131,000,000; and
``(vii) for fiscal year 2002--
``(I) $90,000,000; and
``(II) an additional amount of
$75,000,000.
``(B) Allocation.--
``(i) Allocation formula.--The Secretary shall
allocate the amounts reserved under subparagraph
(A) among the State agencies using a reasonable
formula, as determined and adjusted by the
Secretary each fiscal year, to reflect--
``(I) changes in each State's
caseload (as defined in section
6(o)(6)(A));
``(II) for fiscal year 1998, the
portion of food stamp recipients who
reside in each State who are not
eligible for an exception under section
6(o)(3); and
``(III) for each of fiscal years
1999 through 2002, the portion of food
stamp recipients who reside in each
State who are not eligible for an
exception under section 6(o)(3) and
who--
``(aa) do not reside in an
area subject to a waiver granted
by the Secretary under section
6(o)(4); or
``(bb) do reside in an area
subject to a waiver granted by
the Secretary under section
6(o)(4), if the State agency
provides employment and training
services in the area to food
stamp recipients who are not
eligible for an exception under
section 6(o)(3).
``(ii) Estimated factors.--The Secretary shall
estimate the portion of food stamp recipients who
reside in each State who are not eligible for an
exception under section 6(o)(3) based on the
survey conducted to carry out subsection (c) for
fiscal year 1996 and such other factors as the
Secretary considers appropriate due to the timing
and limitations of the survey.
[[Page 111 STAT. 254]]
``(iii) Reporting requirement.--A State agency
shall submit such reports to the Secretary as the
Secretary determines are necessary to ensure
compliance with this paragraph.
``(C) Reallocation.--If a State agency will not
expend all of the funds allocated to the State agency
for a fiscal year under subparagraph (B), the Secretary
shall reallocate the unexpended funds to other States
(during the fiscal year or the subsequent fiscal year)
as the Secretary considers appropriate and equitable.
``(D) Minimum allocation.--Notwithstanding
subparagraph (B), the Secretary shall ensure that each
State agency operating an employment and training
program shall receive not less than $50,000 for each
fiscal year.
``(E) Use of funds.--Of the amount of funds a State
agency receives under subparagraphs (A) through (D) for
a fiscal year, not less than 80 percent of the funds
shall be used by the State agency during the fiscal year
to serve food stamp recipients who--
``(i) are not eligible for an exception under
section 6(o)(3); and
``(ii) are placed in and comply with a program
described in subparagraph (B) or (C) of section
6(o)(2).
``(F) Maintenance of effort.--To receive an
allocation of an additional amount made available under
subclause (II) of each of clauses (iii) through (vii) of
subparagraph (A), a State agency shall maintain the
expenditures of the State agency for employment and
training programs and workfare programs for any fiscal
year under paragraph (2), and administrative expenses
described in section 20(g)(1), at a level that is not
less than the level of the expenditures by the State
agency to carry out the programs and such expenses for
fiscal year 1996.
``(G) Component costs.--The Secretary shall monitor
State agencies' expenditure of funds for employment and
training programs provided under this paragraph,
including the costs of individual components of State
agencies' programs. The Secretary may determine the
reimbursable costs of employment and training
components, and, if the Secretary makes such a
determination, the Secretary shall determine that the
amounts spent or planned to be spent on the components
reflect the reasonable cost of efficiently and
economically providing components appropriate to
recipient employment and training needs, taking into
account, as the Secretary deems appropriate, prior
expenditures on the components, the variability of costs
among State agencies' components, the characteristics of
the recipients to be served, and such other factors as
the Secretary considers necessary.''.
(b) Report <<NOTE: 7 USC 2025 note.>> to Congress.--Not later than
30 months after the date of enactment of this Act, the Secretary of
Agriculture shall submit to the Committee on Agriculture of the House of
Representatives and the Committee on Agriculture, Nutrition, and
Forestry of the Senate a report regarding whether the amounts made
available under section 16(h)(1)(A) of the Food Stamp Act of 1977 (as a
result of the amendment made by subsection (a))
[[Page 111 STAT. 255]]
have been used by State agencies to increase the number of work slots
for recipients subject to section 6(o) of the Food Stamp Act of 1977 (7
U.S.C. 2015(o)) in employment and training programs and workfare in the
most efficient and effective manner practicable.
SEC. 1003. DENIAL OF FOOD STAMPS FOR PRISONERS.
(a) State Plans.--
(1) In General.--Section 11(e) of the Food Stamp Act of 1977
(7 U.S.C. 2020(e)) is amended by striking paragraph (20) and
inserting the following:
``(20) that the State agency shall establish a system and
take action on a periodic basis--
``(A) to verify and otherwise ensure that an
individual does not receive coupons in more than 1
jurisdiction within the State; and
``(B) to verify and otherwise ensure that an
individual who is placed under detention in a Federal,
State, or local penal, correctional, or other detention
facility for more than 30 days shall not be eligible to
participate in the food stamp program as a member of any
household, except that--
``(i) the Secretary may determine that
extraordinary circumstances make it impracticable
for the State agency to obtain information
necessary to discontinue inclusion of the
individual; and
``(ii) a State agency that obtains information
collected under section 1611(e)(1)(I)(i)(I) of the
Social Security Act (42 U.S.C.
1382(e)(1)(I)(i)(I)) pursuant to section
1611(e)(1)(I)(ii)(II) of that Act (42 U.S.C.
1382(e)(1)(I)(ii)(II)), or under another program
determined by the Secretary to be comparable to
the program carried out under that section, shall
be considered in compliance with this
subparagraph.''.
(2) Limits on disclosure and use of information.--Section
11(e)(8)(E) of the Food Stamp Act of 1977 (7 U.S.C.
2020(e)(8)(E)) is amended by striking ``paragraph (16)'' and
inserting ``paragraph (16) or (20)(B)''.
(3) Effective <<NOTE: 7 USC 2020 note.>> Date.--
(A) In general.--Except as provided in subparagraph
(B), the amendments made by this subsection shall take
effect on the date that is 1 year after the date of
enactment of this Act.
(B) Extension.--The Secretary of Agriculture may
grant a State an extension of time to comply with the
amendments made by this subsection, not to exceed beyond
the date that is 2 years after the date of enactment of
this Act, if the chief executive officer of the State
submits a request for the extension to the Secretary--
(i) stating the reasons why the State is not
able to comply with the amendments made by this
subsection by the date that is 1 year after the
date of enactment of this Act;
(ii) providing evidence that the State is
making a good faith effort to comply with the
amendments made by this subsection as soon as
practicable; and
(iii) detailing a plan to bring the State into
compliance with the amendments made by this
subsection
[[Page 111 STAT. 256]]
as soon as practicable but not later than the date
of the requested extension.
(b) Information Sharing.--Section 11 of the Food Stamp Act of 1977
(7 U.S.C. 2020) is amended by adding at the end the following:
``(q) Denial of Food Stamps for Prisoners.--The Secretary shall
assist States, to the maximum extent practicable, in implementing a
system to conduct computer matches or other systems to prevent prisoners
described in section 11(e)(20)(B) from participating in the food stamp
program as a member of any household.''.
SEC. 1004. NUTRITION EDUCATION.
Section 11(f) of the Food Stamp Act of 1977 (7 U.S.C. 2020(f)) is
amended--
(1) by striking ``(f) To encourage'' and inserting the
following:
``(f) Nutrition Education.--
``(1) In general.--To encourage''; and
(2) by adding at the end the following:
``(2) Grants.--
``(A) In general.--The Secretary shall make
available not more than $600,000 for each of fiscal
years 1998 through 2001 to pay the Federal share of
grants made to eligible private nonprofit organizations
and State agencies to carry out subparagraph (B).
``(B) Eligibility.--A private nonprofit organization
or State agency shall be eligible to receive a grant
under subparagraph (A) if the organization or agency
agrees--
``(i) to use the funds to direct a
collaborative effort to coordinate and integrate
nutrition education into health, nutrition, social
service, and food distribution programs for food
stamp participants and other low-income
households; and
``(ii) to design the collaborative effort to
reach large numbers of food stamp participants and
other low-income households through a network of
organizations, including schools, child care
centers, farmers' markets, health clinics, and
outpatient education services.
``(C) Preference.--In deciding between 2 or more
private nonprofit organizations or State agencies that
are eligible to receive a grant under subparagraph (B),
the Secretary shall give a preference to an organization
or agency that conducted a collaborative effort
described in subparagraph (B) and received funding for
the collaborative effort from the Secretary before the
date of enactment of this paragraph.
``(D) Federal share.--
``(i) In general.--Subject to subparagraph
(E), the Federal share of a grant under this
paragraph shall be 50 percent.
``(ii) No in-kind contributions.--The non-
Federal share of a grant under this paragraph
shall be in cash.
``(iii) Private funds.--The non-Federal share
of a grant under this paragraph may include
amounts from private nongovernmental sources.
[[Page 111 STAT. 257]]
``(E) Limit on individual grant.--The Federal share
of a grant under subparagraph (A) may not exceed
$200,000 for a fiscal year.''.
SEC. 1005. <<NOTE: 7 USC 2015 note.>> REGULATIONS; EFFECTIVE DATE.
(a) Regulations.--Not later than 1 year after the date of enactment
of this Act, the Secretary of Agriculture shall promulgate such
regulations as are necessary to implement the amendments made by this
title.
(b) Effective Date.--The amendments made by sections 1001 and 1002
take effect on October 1, 1997, without regard to whether regulations
have been promulgated to implement the amendments made by such sections.
TITLE II--HOUSING AND RELATED PROVISIONS
SEC. 2001. TABLE OF CONTENTS.
The table of contents for this title is as follows:
TITLE II--HOUSING AND RELATED PROVISIONS
Sec. 2001. Table of contents.
Sec. 2002. Extension of foreclosure avoidance and borrower assistance
provisions for FHA single family housing mortgage insurance
program.
Sec. 2003. Adjustment of maximum monthly rents for certain dwelling
units in new construction and substantial or moderate
rehabilitation projects assisted under section 8 rental
assistance program.
Sec. 2004. Adjustment of maximum monthly rents for non-turnover dwelling
units assisted under section 8 rental assistance program.
SEC. 2002. EXTENSION OF FORECLOSURE AVOIDANCE AND BORROWER ASSISTANCE
PROVISIONS FOR FHA SINGLE FAMILY HOUSING MORTGAGE INSURANCE
PROGRAM.
Section 407 of The Balanced Budget Downpayment Act, I (12 U.S.C.
1710 note) is amended--
(1) in subsection (c)--
(A) by striking ``only''; and
(B) by inserting ``, on, or after'' after
``before''; and
(2) by striking subsection (e).
SEC. 2003. ADJUSTMENT OF MAXIMUM MONTHLY RENTS FOR CERTAIN DWELLING
UNITS IN NEW CONSTRUCTION AND SUBSTANTIAL OR MODERATE
REHABILITATION PROJECTS ASSISTED UNDER SECTION 8 RENTAL
ASSISTANCE PROGRAM.
The third sentence of section 8(c)(2)(A) of the United States
Housing Act of 1937 (42 U.S.C. 1437f(c)(2)(A)) is amended by inserting
before the period at the end the following: ``, and during fiscal year
1999 and thereafter''.
SEC. 2004. ADJUSTMENT OF MAXIMUM MONTHLY RENTS FOR NON-TURNOVER DWELLING
UNITS ASSISTED UNDER SECTION 8 RENTAL ASSISTANCE PROGRAM.
The last sentence of section 8(c)(2)(A) of the United States Housing
Act of 1937 (42 U.S.C. 1437f(c)(2)(A)) is amended by inserting before
the period at the end the following: ``, and during fiscal year 1999 and
thereafter''.
[[Page 111 STAT. 258]]
TITLE III--COMMUNICATIONS AND SPECTRUM ALLOCATION PROVISIONS
SEC. 3001. DEFINITIONS.
(a) Common <<NOTE: 47 USC 153 note.>> Terminology.--Except as
otherwise provided in this title, the terms used in this title have the
meanings provided in section 3 of the Communications Act of 1934 (47
U.S.C. 153), as amended by this section.
(b) Additional Definitions.--Section 3 of the Communications Act of
1934 (47 U.S.C. 153) is amended--
(1) by redesignating paragraphs (49) through (51) as
paragraphs (50) through (52), respectively; and
(2) by inserting after paragraph (48) the following new
paragraph:
``(49) Television service.--
``(A) Analog television service.--The term `analog
television service' means television service provided
pursuant to the transmission standards prescribed by the
Commission in section 73.682(a) of its regulations (47
C.F.R. 73.682(a)).
``(B) Digital television service.--The term `digital
television service' means television service provided
pursuant to the transmission standards prescribed by the
Commission in section 73.682(d) of its regulations (47
C.F.R. 73.682(d)).''.
SEC. 3002. SPECTRUM AUCTIONS.
(a) Extension and Expansion of Auction Authority.--
(1) In general.--Section 309(j) of the Communications Act of
1934 (47 U.S.C. 309(j)) is amended--
(A) by striking paragraphs (1) and (2) and inserting
in lieu thereof the following:
``(1) General authority.--If, consistent with the
obligations described in paragraph (6)(E), mutually exclusive
applications are accepted for any initial license or
construction permit, then, except as provided in paragraph (2),
the Commission shall grant the license or permit to a qualified
applicant through a system of competitive bidding that meets the
requirements of this subsection.
``(2) Exemptions.--The competitive bidding authority granted
by this subsection shall not apply to licenses or construction
permits issued by the Commission--
``(A) for public safety radio services, including
private internal radio services used by State and local
governments and non-government entities and including
emergency road services provided by not-for-profit
organizations, that--
``(i) are used to protect the safety of life,
health, or property; and
``(ii) are not made commercially available to
the public;
``(B) for initial licenses or construction permits
for digital television service given to existing
terrestrial broadcast licensees to replace their analog
television service licenses; or
``(C) for stations described in section 397(6) of
this Act.'';
[[Page 111 STAT. 259]]
(B) in paragraph (3)--
(i) by inserting after the second sentence the
following new sentence: ``The Commission shall,
directly or by contract, provide for the design
and conduct (for purposes of testing) of
competitive bidding using a contingent
combinatorial bidding system that permits
prospective bidders to bid on combinations or
groups of licenses in a single bid and to enter
multiple alternative bids within a single bidding
round.'';
(ii) by striking ``and'' at the end of
subparagraph (C);
(iii) by striking the period at the end of
subparagraph (D) and inserting ``; and''; and
(iv) by adding at the end the following new
subparagraph:
``(E) ensure that, in the scheduling of any
competitive bidding under this subsection, an adequate
period is allowed--
``(i) before issuance of bidding rules, to
permit notice and comment on proposed auction
procedures; and
``(ii) after issuance of bidding rules, to
ensure that interested parties have a sufficient
time to develop business plans, assess market
conditions, and evaluate the availability of
equipment for the relevant services.'';
(C) in paragraph (4)--
(i) by striking ``and'' at the end of
subparagraph (D);
(ii) by striking the period at the end of
subparagraph (E) and inserting ``; and''; and
(iii) by adding at the end the following new
subparagraph:
``(F) prescribe methods by which a reasonable
reserve price will be required, or a minimum bid will be
established, to obtain any license or permit being
assigned pursuant to the competitive bidding, unless the
Commission determines that such a reserve price or
minimum bid is not in the public interest.'';
(D) in paragraph (8)(B)--
(i) by striking the third sentence; and
(ii) by adding at the end the following new
sentence: ``No sums may be retained under this
subparagraph during any fiscal year beginning
after September 30, 1998, if the annual report of
the Commission under section 4(k) for the second
preceding fiscal year fails to include in the
itemized statement required by paragraph (3) of
such section a statement of each expenditure made
for purposes of conducting competitive bidding
under this subsection during such second preceding
fiscal year.'';
(E) in paragraph (11), by striking ``1998'' and
inserting ``2007''; and
(F) in paragraph (13)(F), by striking ``September
30, 1998'' and inserting ``the date of enactment of the
Balanced Budget Act of 1997''.
[[Page 111 STAT. 260]]
(2) Termination of Lottery Authority.--Section 309(i) of the
Communications Act of 1934 (47 U.S.C. 309(i)) is amended--
(A) by striking paragraph (1) and inserting the
following:
``(1) General authority.--Except as provided in paragraph
(5), if there is more than one application for any initial
license or construction permit, then the Commission shall have
the authority to grant such license or permit to a qualified
applicant through the use of a system of random selection.'';
and
(B) by adding at the end the following new
paragraph:
``(5) Termination of authority.--(A) Except as provided in
subparagraph (B), the Commission shall not issue any license or
permit using a system of random selection under this subsection
after July 1, 1997.
``(B) Subparagraph (A) of this paragraph shall not apply
with respect to licenses or permits for stations described in
section 397(6) of this Act.''.
(3) Resolution of pending comparative licensing cases.--
Section 309 of the Communications Act of 1934 (47 U.S.C. 309) is
further amended by adding at the end the following new
subsection:
``(l) Applicability of Competitive Bidding to Pending Comparative
Licensing Cases.--With respect to competing applications for initial
licenses or construction permits for commercial radio or television
stations that were filed with the Commission before July 1, 1997, the
Commission shall--
``(1) have the authority to conduct a competitive bidding
proceeding pursuant to subsection (j) to assign such license or
permit;
``(2) treat the persons filing such applications as the only
persons eligible to be qualified bidders for purposes of such
proceeding; and
``(3) waive any provisions of its regulations necessary to
permit such persons to enter an agreement to procure the removal
of a conflict between their applications during the 180-day
period beginning on the date of enactment of the Balanced Budget
Act of 1997.''.
(4) Conforming amendment.--Section 6002 of the Omnibus
Budget Reconciliation Act of 1993 <<NOTE: 47 USC 309 note.>> is
amended by striking subsection (e).
(5) Effective <<NOTE: 47 USC 309 note.>> Date.--Except as
otherwise provided therein, the amendments made by this
subsection are effective on July 1, 1997.
(b) Accelerated <<NOTE: 47 USC 925 note.>> Availability for Auction
of 1,710-1,755 Megahertz from Initial Reallocation Report.--The band of
frequencies located at 1,710-1,755 megahertz identified in the initial
reallocation report under section 113(a) of the National
Telecommunications and Information Administration Act (47 U.S.C. 923(a))
shall, notwithstanding the timetable recommended under section 113(e) of
such Act and section 115(b)(1) of such Act, be available in accordance
with this subsection for assignment for commercial use. The Commission
shall assign licenses for such use by competitive bidding commenced
after January 1, 2001, pursuant to section 309(j) of the Communications
Act of 1934 (47 U.S.C. 309(j)).
[[Page 111 STAT. 261]]
(c) Commission <<NOTE: 47 USC 925 note.>> Obligation To Make
Additional Spectrum Available by Auction.--
(1) In general.--The Commission shall complete all actions
necessary to permit the assignment by September 30, 2002, by
competitive bidding pursuant to section 309(j) of the
Communications Act of 1934 (47 U.S.C. 309(j)), of licenses for
the use of bands of frequencies that--
(A) in the aggregate span not less than 55
megahertz;
(B) are located below 3 gigahertz;
(C) have not, as of the date of enactment of this
Act--
(i) been designated by Commission regulation
for assignment pursuant to such section;
(ii) been identified by the Secretary of
Commerce pursuant to section 113 of the National
Telecommunications and Information Administration
Organization Act (47 U.S.C. 923);
(iii) been allocated for Federal Government
use pursuant to section 305 of the Communications
Act of 1934 (47 U.S.C. 305);
(iv) been designated for reallocation under
section 337 of the Communications Act of 1934 (as
added by this Act); or
(v) been allocated or authorized for
unlicensed use pursuant to part 15 of the
Commission's regulations (47 C.F.R. Part 15), if
the operation of services licensed pursuant to
competitive bidding would interfere with operation
of end-user products permitted under such
regulations;
(D) include frequencies at 2,110-2,150 megahertz;
and
(E) include 15 megahertz from within the bands of
frequencies at 1,990-2,110 megahertz.
(2) Criteria for Reassignment.--In making available bands of
frequencies for competitive bidding pursuant to paragraph (1),
the Commission shall--
(A) seek to promote the most efficient use of the
electromagnetic spectrum;
(B) consider the cost of relocating existing uses to
other bands of frequencies or other means of
communication;
(C) consider the needs of existing public safety
radio services (as such services are described in
section 309(j)(2)(A) of the Communications Act of 1934,
as amended by this Act);
(D) comply with the requirements of international
agreements concerning spectrum allocations; and
(E) coordinate with the Secretary of Commerce when
there is any impact on Federal Government spectrum use.
(3) Use of bands at 2,110-2,150 megahertz.--The Commission
shall reallocate spectrum located at 2,110-2,150 megahertz for
assignment by competitive bidding unless the Commission
determines that auction of other spectrum (A) better serves the
public interest, convenience, and necessity, and (B) can
reasonably be expected to produce greater receipts. If the
Commission makes such a determination, then the Commission
shall, within 2 years after the date of enactment of this Act,
[[Page 111 STAT. 262]]
identify an alternative 40 megahertz, and report to the Congress
an identification of such alternative 40 megahertz for
assignment by competitive bidding.
(4) Use of 15 megahertz from bands at 1,990-2,110
megahertz.--The Commission shall reallocate 15 megahertz from
spectrum located at 1,990-2,110 megahertz for assignment by
competitive bidding unless the President determines such
spectrum cannot be reallocated due to the need to protect
incumbent Federal systems from interference, and that allocation
of other spectrum (A) better serves the public interest,
convenience, and necessity, and (B) can reasonably be expected
to produce comparable receipts. If the President makes such a
determination, then the President shall, within 2 years after
the date of enactment of this Act, identify alternative bands of
frequencies totalling 15 megahertz, and report to the Congress
an identification of such alternative bands for assignment by
competitive bidding.
(5) Notification to the Secretary of Commerce.--The
Commission shall attempt to accommodate incumbent licensees
displaced under this section by relocating them to other
frequencies available for allocation by the Commission. The
Commission shall notify the Secretary of Commerce whenever the
Commission is not able to provide for the effective relocation
of an incumbent licensee to a band of frequencies available to
the Commission for assignment. The notification shall include--
(A) specific information on the incumbent licensee;
(B) the bands the Commission considered for
relocation of the licensee;
(C) the reasons the licensee cannot be accommodated
in such bands; and
(D) the bands of frequencies identified by the
Commission that are--
(i) suitable for the relocation of such
licensee; and
(ii) allocated for Federal Government use, but
that could be reallocated pursuant to part B of
the National Telecommunications and Information
Administration Organization Act (as amended by
this Act).
(d) Identification and Reallocation of Frequencies.--
(1) In general.--Section 113 of the National
Telecommunications and Information Administration Organization
Act (47 U.S.C. 923) is amended by adding at the end thereof the
following:
``(f) Additional Reallocation Report.--If the Secretary receives a
notice from the Commission pursuant to section 3002(c)(5) of the
Balanced Budget Act of 1997, the Secretary shall prepare and submit to
the President, the Commission, and the Congress a report recommending
for reallocation for use other than by Federal Government stations under
section 305 of the 1934 Act (47 U.S.C. 305), bands of frequencies that
are suitable for the licensees identified in the Commission's notice.
The Commission shall, not later than one year after receipt of such
report, prepare, submit to the President and the Congress, and
implement, a plan for the immediate allocation and assignment of such
frequencies under the 1934 Act to incumbent licensees described in the
Commission's notice.
``(g) Relocation of Federal Government Stations.--
[[Page 111 STAT. 263]]
``(1) In general.--In order to expedite the commercial use
of the electromagnetic spectrum and notwithstanding section
3302(b) of title 31, United States Code, any Federal entity
which operates a Federal Government station may accept from any
person payment of the expenses of relocating the Federal
entity's operations from one or more frequencies to another
frequency or frequencies, including the costs of any
modification, replacement, or reissuance of equipment,
facilities, operating manuals, or regulations incurred by that
entity. Such payments may be in advance of relocation and may be
in cash or in kind. Any such payment in cash shall be deposited
in the account of such Federal entity in the Treasury of the
United States or in a separate account authorized by law. Funds
deposited according to this paragraph shall be available,
without appropriation or fiscal year limitation, only for such
expenses of the Federal entity for which such funds were
deposited under this paragraph.
``(2) Process for relocation.--Any person seeking to
relocate a Federal Government station that has been assigned a
frequency within a band that has been allocated for mixed
Federal and non-Federal use, or that has been scheduled for
reallocation to non-Federal use, may submit a petition for such
relocation to NTIA. The NTIA shall limit or terminate the
Federal Government station's operating license within 6 months
after receiving the petition if the following requirements are
met:
``(A) the person seeking relocation of the Federal
Government station has guaranteed to pay all relocation
costs incurred by the Federal entity, including all
engineering, equipment, site acquisition and
construction, and regulatory fee costs;
``(B) all activities necessary for implementing the
relocation have been completed, including construction
of replacement facilities (if necessary and appropriate)
and identifying and obtaining new frequencies for use by
the relocated Federal Government station (where such
station is not relocating to spectrum reserved
exclusively for Federal use);
``(C) any necessary replacement facilities,
equipment modifications, or other changes have been
implemented and tested to ensure that the Federal
Government station is able to successfully accomplish
its purposes; and
``(D) NTIA has determined that the proposed use of
the spectrum frequency band to which the Federal entity
will relocate its operations is--
``(i) consistent with obligations undertaken
by the United States in international agreements
and with United States national security and
public safety interests; and
``(ii) suitable for the technical
characteristics of the band and consistent with
other uses of the band.
In exercising its authority under clause (i) of this
subparagraph, NTIA shall consult with the Secretary of
Defense, the Secretary of State, or other appropriate
officers of the Federal Government.
``(3) Right to reclaim.--If within one year after the
relocation the Federal entity demonstrates to the Commission
that
[[Page 111 STAT. 264]]
the new facilities or spectrum are not comparable to the
facilities or spectrum from which the Federal Government station
was relocated, the person who filed the petition under paragraph
(2) for such relocation shall take reasonable steps to remedy
any defects or pay the Federal entity for the expenses incurred
in returning the Federal Government station to the spectrum from
which such station was relocated.
``(h) Federal Action To Expedite Spectrum Transfer.--Any Federal
Government station which operates on electromagnetic spectrum that has
been identified in any reallocation report under this section shall, to
the maximum extent practicable through the use of the authority granted
under subsection (g) and any other applicable provision of law, take
action to relocate its spectrum use to other frequencies that are
reserved for Federal use or to consolidate its spectrum use with other
Federal Government stations in a manner that maximizes the spectrum
available for non-Federal use.
``(i) Definition.--For purposes of this section, the term `Federal
entity' means any department, agency, or other instrumentality of the
Federal Government that utilizes a Government station license obtained
under section 305 of the 1934 Act (47 U.S.C. 305).''.
(2) Section 114(a) of such Act (47 U.S.C. 924(a)) is
amended--
(A) in paragraph (1), by striking ``(a) or (d)(1)''
and inserting ``(a), (d)(1), or (f)''; and
(B) in paragraph (2), by striking ``either'' and
inserting ``any''.
(e) Identification and Reallocation of Auctionable Frequencies.--
(1) Second report required.--Section 113(a) of the National
Telecommunications and Information Administration Organization
Act (47 U.S.C. 923(a)) is amended by inserting ``and within 6
months after the date of enactment of the Balanced Budget Act of
1997'' after ``Act of 1993''.
(2) In general.--Section 113(b) of such Act (47 U.S.C.
923(b)) is amended--
(A) by striking the caption of paragraph (1) and
inserting ``Initial reallocation report.--'';
(B) by inserting ``in the initial report required by
subsection (a)'' after ``recommend for reallocation'' in
paragraph (1);
(C) by inserting ``or (3)'' after ``paragraph (1)''
each place it appears in paragraph (2); and
(D) by adding at the end thereof the following:
``(3) Second reallocation report.--In accordance with the
provisions of this section, the Secretary shall recommend for
reallocation in the second report required by subsection (a),
for use other than by Federal Government stations under section
305 of the 1934 Act (47 U.S.C. 305), a band or bands of
frequencies that--
``(A) in the aggregate span not less than 20
megahertz;
``(B) are located below 3 gigahertz; and
``(C) meet the criteria specified in paragraphs (1)
through (5) of subsection (a).''.
[[Page 111 STAT. 265]]
(3) Conforming amendment.--Section 113(d) of such Act (47
U.S.C. 923(d)) is amended by striking ``final report'' and
inserting ``initial report''.
(4) Allocation and assignment.--Section 115 of such Act (47
U.S.C. 925) is amended--
(A) by striking ``the report required by section
113(a)'' in subsection (b) and inserting ``the initial
reallocation report required by section 113(a)''; and
(B) by adding at the end thereof the following:
``(c) Allocation and Assignment of Frequencies Identified in the
Second Reallocation Report.--
``(1) Plan and implementation.--With respect to the
frequencies made available for reallocation pursuant to section
113(b)(3), the Commission shall, not later than one year after
receipt of the second reallocation report required by section
113(a), prepare, submit to the President and the Congress, and
implement, a plan for the immediate allocation and assignment
under the 1934 Act of all such frequencies in accordance with
section 309(j) of such Act.
``(2) Contents.--The plan prepared by the Commission under
paragraph (1) shall consist of a schedule of allocation and
assignment of those frequencies in accordance with section
309(j) of the 1934 Act in time for the assignment of those
licenses or permits by September 30, 2002.''.
SEC. 3003. AUCTION OF RECAPTURED BROADCAST TELEVISION SPECTRUM.
Section 309(j) of the Communications Act of 1934 (47 U.S.C. 309(j))
is amended by adding at the end the following new paragraph:
``(14) Auction of recaptured broadcast television
spectrum.--
``(A) Limitations on terms of terrestrial television
broadcast licenses.--A television broadcast license that
authorizes analog television service may not be renewed
to authorize such service for a period that extends
beyond December 31, 2006.
``(B) Extension.--The Commission shall extend the
date described in subparagraph (A) for any station that
requests such extension in any television market if the
Commission finds that--
``(i) one or more of the stations in such
market that are licensed to or affiliated with one
of the four largest national television networks
are not broadcasting a digital television service
signal, and the Commission finds that each such
station has exercised due diligence and satisfies
the conditions for an extension of the
Commission's applicable construction deadlines for
digital television service in that market;
``(ii) digital-to-analog converter technology
is not generally available in such market; or
``(iii) in any market in which an extension is
not available under clause (i) or (ii), 15 percent
or more of the television households in such
market--
``(I) do not subscribe to a
multichannel video programming
distributor (as defined in section
[[Page 111 STAT. 266]]
602) that carries one of the digital
television service programming channels
of each of the television stations
broadcasting such a channel in such
market; and
``(II) do not have either--
``(a) at least one
television receiver capable of
receiving the digital television
service signals of the
television stations licensed in
such market; or
``(b) at least one
television receiver of analog
television service signals
equipped with digital-to-analog
converter technology capable of
receiving the digital television
service signals of the
television stations licensed in
such market.
``(C) Spectrum reversion and resale.--
``(i) The Commission shall--
``(I) ensure that, as licenses for
analog television service expire
pursuant to subparagraph (A) or (B),
each licensee shall cease using
electromagnetic spectrum assigned to
such service according to the
Commission's direction; and
``(II) reclaim and organize the
electromagnetic spectrum in a manner
consistent with the objectives described
in paragraph (3) of this subsection.
``(ii) Licensees for new services occupying
spectrum reclaimed pursuant to clause (i) shall be
assigned in accordance with this
subsection. <<NOTE: Reports.>> The Commission
shall complete the assignment of such licenses,
and report to the Congress the total revenues from
such competitive bidding, by September 30, 2002.
``(D) Certain limitations on qualified bidders
prohibited.--In prescribing any regulations relating to
the qualification of bidders for spectrum reclaimed
pursuant to subparagraph (C)(i), the Commission, for any
license that may be used for any digital television
service where the grade A contour of the station is
projected to encompass the entirety of a city with a
population in excess of 400,000 (as determined using the
1990 decennial census), shall not--
``(i) preclude any party from being a
qualified bidder for such spectrum on the basis
of--
``(I) the Commission's duopoly rule
(47 C.F.R. 73.3555(b)); or
``(II) the Commission's newspaper
cross-ownership rule (47 C.F.R.
73.3555(d)); or
``(ii) apply either such rule to preclude such
a party that is a winning bidder in a competitive
bidding for such spectrum from using such spectrum
for digital television service.''.
SEC. 3004. ALLOCATION AND ASSIGNMENT OF NEW PUBLIC SAFETY SERVICES
LICENSES AND COMMERCIAL LICENSES.
Title III of the Communications Act of 1934 is amended by inserting
after section 336 (47 U.S.C. 336) the following new section:
[[Page 111 STAT. 267]]
``SEC. 337. <<NOTE: 47 USC 337.>> ALLOCATION AND ASSIGNMENT OF NEW
PUBLIC SAFETY SERVICES LICENSES AND COMMERCIAL LICENSES.
``(a) In General.--Not later than January 1, 1998, the Commission
shall allocate the electromagnetic spectrum between 746 megahertz and
806 megahertz, inclusive, as follows:
``(1) 24 megahertz of that spectrum for public safety
services according to the terms and conditions established by
the Commission, in consultation with the Secretary of Commerce
and the Attorney General; and
``(2) 36 megahertz of that spectrum for commercial use to be
assigned by competitive bidding pursuant to section 309(j).
``(b) Assignment.--The Commission shall--
``(1) commence assignment of the licenses for public safety
services created pursuant to subsection (a) no later than
September 30, 1998; and
``(2) commence competitive bidding for the commercial
licenses created pursuant to subsection (a) after January 1,
2001.
``(c) Licensing of Unused Frequencies for Public Safety Services.--
``(1) Use of unused channels for public safety services.--
Upon application by an entity seeking to provide public safety
services, the Commission shall waive any requirement of this Act
or its regulations implementing this Act (other than its
regulations regarding harmful interference) to the extent
necessary to permit the use of unassigned frequencies for the
provision of public safety services by such entity. An
application shall be granted under this subsection if the
Commission finds that--
``(A) no other spectrum allocated to public safety
services is immediately available to satisfy the
requested public safety service use;
``(B) the requested use is technically feasible
without causing harmful interference to other spectrum
users entitled to protection from such interference
under the Commission's regulations;
``(C) the use of the unassigned frequency for the
provision of public safety services is consistent with
other allocations for the provision of such services in
the geographic area for which the application is made;
``(D) the unassigned frequency was allocated for its
present use not less than 2 years prior to the date on
which the application is granted; and
``(E) granting such application is consistent with
the public interest.
``(2) Applicability.--Paragraph (1) shall apply to any
application to provide public safety services that is pending or
filed on or after the date of enactment of the Balanced Budget
Act of 1997.
``(d) Conditions on Licenses.--In establishing service rules with
respect to licenses granted pursuant to this section, the Commission--
``(1) shall establish interference limits at the boundaries
of the spectrum block and service area;
``(2) shall establish any additional technical restrictions
necessary to protect full-service analog television service and
[[Page 111 STAT. 268]]
digital television service during a transition to digital
television service;
``(3) may permit public safety services licensees and
commercial licensees--
``(A) to aggregate multiple licenses to create
larger spectrum blocks and service areas; and
``(B) to disaggregate or partition licenses to
create smaller spectrum blocks or service areas; and
``(4) shall establish rules insuring that public safety
services licensees using spectrum reallocated pursuant to
subsection (a)(1) shall not be subject to harmful interference
from television broadcast licensees.
``(e) Removal and Relocation of Incumbent Broadcast Licensees.--
``(1) Channels 60 to 69.--Any person who holds a television
broadcast license to operate between 746 and 806 megahertz may
not operate at that frequency after the date on which the
digital television service transition period terminates, as
determined by the Commission.
``(2) Incumbent qualifying low-power stations.--After making
any allocation or assignment under this section, the Commission
shall seek to assure, consistent with the Commission's plan for
allotments for digital television service, that each qualifying
low-power television station is assigned a frequency below 746
megahertz to permit the continued operation of such station.
``(f) Definitions.--For purposes of this section:
``(1) Public safety services.--The term `public safety
services' means services--
``(A) the sole or principal purpose of which is to
protect the safety of life, health, or property;
``(B) that are provided--
``(i) by State or local government entities;
or
``(ii) by nongovernmental organizations that
are authorized by a governmental entity whose
primary mission is the provision of such services;
and
``(C) that are not made commercially available to
the public by the provider.
``(2) Qualifying low-power television stations.--A station
is a qualifying low-power television station if, during the 90
days preceding the date of enactment of the Balanced Budget Act
of 1997--
``(A) such station broadcast a minimum of 18 hours
per day;
``(B) such station broadcast an average of at least
3 hours per week of programming that was produced within
the market area served by such station; and
``(C) such station was in compliance with the
requirements applicable to low-power television
stations.''.
SEC. 3005. FLEXIBLE USE OF ELECTROMAGNETIC SPECTRUM.
Section 303 of the Communications Act of 1934 (47 U.S.C. 303) is
amended by adding at the end thereof the following:
``(y) Have authority to allocate electromagnetic spectrum so as to
provide flexibility of use, if--
``(1) such use is consistent with international agreements
to which the United States is a party; and
[[Page 111 STAT. 269]]
``(2) the Commission finds, after notice and an opportunity
for public comment, that--
``(A) such an allocation would be in the public
interest;
``(B) such use would not deter investment in
communications services and systems, or technology
development; and
``(C) such use would not result in harmful
interference among users.''.
SEC. 3006. <<NOTE: 47 USC 254 note.>> UNIVERSAL SERVICE FUND PAYMENT
SCHEDULE.
(a) Appropriations to the Universal Service Fund.--
(1) Appropriation.--There is hereby appropriated to the
Commission $3,000,000,000 in fiscal year 2001, which shall be
disbursed on October 1, 2000, to the Administrator of the
Federal universal service support programs established pursuant
to section 254 of the Communications Act of 1934 (47 U.S.C.
254), and which may be expended by the Administrator in support
of such programs as provided pursuant to the rules implementing
that section.
(2) Return to treasury.--The Administrator shall transfer
$3,000,000,000 from the funds collected for such support
programs to the General Fund of the Treasury on October 1, 2001.
(b) Fee Adjustments.--The Commission shall direct the Administrator
to adjust payments by telecommunications carriers and other providers of
interstate telecommunications so that the $3,000,000,000 of the total
payments by such carriers or providers to the Administrator for fiscal
year 2001 shall be deferred until October 1, 2001.
(c) Preservation of Authority.--Nothing in this section shall affect
the Administrator's authority to determine the amounts that should be
expended for universal service support programs pursuant to section 254
of the Communications Act of 1934 and the rules implementing that
section.
(d) Definition.--For purposes of this section, the term
``Administrator'' means the Administrator designated by the Federal
Communications Commission to administer Federal universal service
support programs pursuant to section 254 of the Communications Act of
1934.
SEC. 3007. <<NOTE: 47 USC 309 note.>> DEADLINE FOR COLLECTION
The Commission shall conduct the competitive bidding required under
this title or the amendments made by this title in a manner that ensures
that all proceeds of such bidding are deposited in accordance with
section 309(j)(8) of the Communications Act of 1934 not later than
September 30, 2002.
SEC. 3008. <<NOTE: 47 USC 309 note.>> ADMINISTRATIVE PROCEDURES FOR
SPECTRUM AUCTIONS.
Notwithstanding section 309(b) of the Communications Act of 1934 (47
U.S.C. 309(b)), no application for an instrument of authorization for
frequencies assigned under this title (or amendments made by this title)
shall be granted by the Commission earlier than 7 days following
issuance of public notice by the Commission of the acceptance for filing
of such application or of any substantial amendment thereto.
Notwithstanding section 309(d)(1) of such Act (47 U.S.C. 309(d)(1)), the
Commission may specify a period (no less than 5 days following issuance
of such
[[Page 111 STAT. 270]]
public notice) for the filing of petitions to deny any application for
an instrument of authorization for such frequencies.
TITLE IV--MEDICARE, MEDICAID, AND CHILDREN'S HEALTH PROVISIONS
SEC. 4000. AMENDMENTS TO SOCIAL SECURITY ACT AND REFERENCES TO OBRA;
TABLE OF CONTENTS OF TITLE.
(a) Amendments to Social Security Act.--Except as otherwise
specifically provided, whenever in this title an amendment is expressed
in terms of an amendment to or repeal of a section or other provision,
the reference shall be considered to be made to that section or other
provision of the Social Security Act.
(b) References to OBRA.--In this title, the terms ``OBRA-1986'',
``OBRA-1987'', ``OBRA-1989'', ``OBRA-1990'', and ``OBRA-1993'' refer to
the Omnibus Budget Reconciliation Act of 1986 (Public Law 99-509), the
Omnibus Budget Reconciliation Act of 1987 (Public Law 100-203), the
Omnibus Budget Reconciliation Act of 1989 (Public Law 101-239), the
Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508), and the
Omnibus Budget Reconciliation Act of 1993 (Public Law 103-66),
respectively.
(c) Table of Contents of Title.--The table of contents of this title
is as follows:
Sec. 4000. Amendments to Social Security Act and references to OBRA;
table of contents of title.
Subtitle A--Medicare+Choice Program
Chapter 1--Medicare+Choice Program
subchapter a--medicare+choice program
Sec. 4001. Establishment of Medicare+Choice program.
``Part C--Medicare+Choice Program
``Sec. 1851. Eligibility, election, and enrollment.
``Sec. 1852. Benefits and beneficiary protections.
``Sec. 1853. Payments to Medicare+Choice organizations.
``Sec. 1854. Premiums.
``Sec. 1855. Organizational and financial requirements for
Medicare+Choice organizations; provider-
sponsored organizations.
``Sec. 1856. Establishment of standards.
``Sec. 1857. Contracts with Medicare+Choice organizations.
``Sec. 1859. Definitions; miscellaneous provisions.
Sec. 4002. Transitional rules for current medicare HMO program.
Sec. 4003. Conforming changes in medigap program.
subchapter b--special rules for medicare+choice medical savings accounts
Sec. 4006. Medicare+Choice MSA.
Chapter 2--Demonstrations
subchapter a--medicare+choice competitive pricing demonstration project
Sec. 4011. Medicare prepaid competitive pricing demonstration project.
Sec. 4012. Administration through the Office of Competition; advisory
committee.
Sec. 4013. Project design based on FEHBP competitive bidding model.
subchapter b--social health maintenance organizations
Sec. 4014. Social health maintenance organizations (SHMOs).
subchapter c--medicare subvention demonstration project for military
retirees
Sec. 4015. Medicare subvention demonstration project for military
retirees.
subchapter d--other projects
Sec. 4016. Medicare coordinated care demonstration project.
[[Page 111 STAT. 271]]
Sec. 4017. Orderly transition of municipal health service demonstration
projects.
Sec. 4018. Medicare enrollment demonstration project.
Sec. 4019. Extension of certain medicare community nursing organization
demonstration projects.
Chapter 3--Commissions
Sec. 4021. National Bipartisan Commission on the Future of Medicare.
Sec. 4022. Medicare Payment Advisory Commission.
Chapter 4--Medigap Protections
Sec. 4031. Medigap protections.
Sec. 4032. Addition of high deductible medigap policies.
Chapter 5--Tax Treatment of Hospitals Participating in Provider-
Sponsored Organizations
Sec. 4041. Tax treatment of hospitals which participate in provider-
sponsored organizations.
Subtitle B--Prevention Initiatives
Sec. 4101. Screening mammography.
Sec. 4102. Screening pap smear and pelvic exams.
Sec. 4103. Prostate cancer screening tests.
Sec. 4104. Coverage of colorectal screening.
Sec. 4105. Diabetes self-management benefits.
Sec. 4106. Standardization of medicare coverage of bone mass
measurements.
Sec. 4107. Vaccines outreach expansion.
Sec. 4108. Study on preventive and enhanced benefits.
Subtitle C--Rural Initiatives
Sec. 4201. Medicare rural hospital flexibility program.
Sec. 4202. Prohibiting denial of request by rural referral centers for
reclassification on basis of comparability of wages.
Sec. 4203. Hospital geographic reclassification permitted for purposes
of disproportionate share payment adjustments.
Sec. 4204. Medicare-dependent, small rural hospital payment extension.
Sec. 4205. Rural health clinic services.
Sec. 4206. Medicare reimbursement for telehealth services.
Sec. 4207. Informatics, telemedicine, and education demonstration
project.
Subtitle D--Anti-Fraud and Abuse Provisions and Improvements in
Protecting Program Integrity
Chapter 1--Revisions To Sanctions for Fraud and Abuse
Sec. 4301. Permanent exclusion for those convicted of 3 health care
related crimes.
Sec. 4302. Authority to refuse to enter into medicare agreements with
individuals or entities convicted of felonies.
Sec. 4303. Exclusion of entity controlled by family member of a
sanctioned individual.
Sec. 4304. Imposition of civil money penalties.
Chapter 2--Improvements In Protecting Program Integrity
Sec. 4311. Improving information to medicare beneficiaries.
Sec. 4312. Disclosure of information and surety bonds.
Sec. 4313. Provision of certain identification numbers.
Sec. 4314. Advisory opinions regarding certain physician self-referral
provisions.
Sec. 4315. Replacement of reasonable charge methodology by fee
schedules.
Sec. 4316. Application of inherent reasonableness to all part B services
other than physicians' services.
Sec. 4317. Requirement to furnish diagnostic information.
Sec. 4318. Report by GAO on operation of fraud and abuse control
program.
Sec. 4319. Competitive bidding demonstration projects.
Sec. 4320. Prohibiting unnecessary and wasteful medicare payments for
certain items.
Sec. 4321. Nondiscrimination in post-hospital referral to home health
agencies and other entities.
Chapter 3--Clarifications And Technical Changes
Sec. 4331. Other fraud and abuse related provisions.
Subtitle E--Provisions Relating to Part A Only
Chapter 1--Payment of PPS Hospitals
Sec. 4401. PPS hospital payment update.
[[Page 111 STAT. 272]]
Sec. 4402. Maintaining savings from temporary reduction in capital
payments for PPS hospitals.
Sec. 4403. Disproportionate share.
Sec. 4404. Medicare capital asset sales price equal to book value.
Sec. 4405. Elimination of IME and DSH payments attributable to outlier
payments.
Sec. 4406. Increase base payment rate to Puerto Rico hospitals.
Sec. 4407. Certain hospital discharges to post acute care.
Sec. 4408. Reclassification of certain counties as large urban areas
under medicare program.
Sec. 4409. Geographic reclassification for certain disproportionately
large hospitals.
Sec. 4410. Floor on area wage index.
Chapter 2--Payment of PPS-Exempt Hospitals
subchapter a--general payment provisions
Sec. 4411. Payment update.
Sec. 4412. Reductions to capital payments for certain PPS-exempt
hospitals and units.
Sec. 4413. Rebasing.
Sec. 4414. Cap on TEFRA limits.
Sec. 4415. Bonus and relief payments.
Sec. 4416. Change in payment and target amount for new providers.
Sec. 4417. Treatment of certain long-term care hospitals.
Sec. 4418. Treatment of certain cancer hospitals.
Sec. 4419. Elimination of exemptions for certain hospitals.
subchapter b--prospective payment system for pps-exempt hospitals
Sec. 4421. Prospective payment for inpatient rehabilitation hospital
services.
Sec. 4422. Development of proposal on payments for long-term care
hospitals.
Chapter 3--Payment for Skilled Nursing Facilities
Sec. 4431. Extension of cost limits.
Sec. 4432. Prospective payment for skilled nursing facility services.
Chapter 4--Provisions Related to Hospice Services
Sec. 4441. Payments for hospice services.
Sec. 4442. Payment for home hospice care based on location where care is
furnished.
Sec. 4443. Hospice care benefits periods.
Sec. 4444. Other items and services included in hospice care.
Sec. 4445. Contracting with independent physicians or physician groups
for hospice care services permitted.
Sec. 4446. Waiver of certain staffing requirements for hospice care
programs in nonurbanized areas.
Sec. 4447. Limitation on liability of beneficiaries for certain hospice
coverage denials.
Sec. 4448. Extending the period for physician certification of an
individual's terminal illness.
Sec. 4449. Effective date.
Chapter 5--Other Payment Provisions
Sec. 4451. Reductions in payments for enrollee bad debt.
Sec. 4452. Permanent extension of hemophilia pass-through payment.
Sec. 4453. Reduction in part A medicare premium for certain public
retirees.
Sec. 4454. Coverage of services in religious nonmedical health care
institutions under the medicare and medicaid programs.
Subtitle F--Provisions Relating to Part B Only
Chapter 1--Services of Health Professionals
subchapter a--physicians' services
Sec. 4501. Establishment of single conversion factor for 1998.
Sec. 4502. Establishing update to conversion factor to match spending
under sustainable growth rate.
Sec. 4503. Replacement of volume performance standard with sustainable
growth rate.
Sec. 4504. Payment rules for anesthesia services.
Sec. 4505. Implementation of resource-based methodologies.
Sec. 4506. Dissemination of information on high per discharge relative
values for in-hospital physicians' services.
Sec. 4507. Use of private contracts by medicare beneficiaries.
[[Page 111 STAT. 273]]
subchapter b--other health care professionals
Sec. 4511. Increased medicare reimbursement for nurse practitioners and
clinical nurse specialists.
Sec. 4512. Increased medicare reimbursement for physician assistants.
Sec. 4513. No x-ray required for chiropractic services.
Chapter 2--Payment For Hospital Outpatient Department Services
Sec. 4521. Elimination of formula-driven overpayments (FDO) for certain
outpatient hospital services.
Sec. 4522. Extension of reductions in payments for costs of hospital
outpatient services.
Sec. 4523. Prospective payment system for hospital outpatient department
services.
Chapter 3--Ambulance Services
Sec. 4531. Payments for ambulance services.
Sec. 4532. Demonstration of coverage of ambulance services under
medicare through contracts with units of local government.
Chapter 4--Prospective Payment for Outpatient Rehabilitation Services
Sec. 4541. Prospective payment for outpatient rehabilitation services.
Chapter 5--Other Payment Provisions
Sec. 4551. Payments for durable medical equipment.
Sec. 4552. Oxygen and oxygen equipment.
Sec. 4553. Reduction in updates to payment amounts for clinical
diagnostic laboratory tests; study on laboratory tests.
Sec. 4554. Improvements in administration of laboratory tests benefit.
Sec. 4555. Updates for ambulatory surgical services.
Sec. 4556. Reimbursement for drugs and biologicals.
Sec. 4557. Coverage of oral anti-nausea drugs under chemotherapeutic
regimen.
Sec. 4558. Renal dialysis-related services.
Sec. 4559. Temporary coverage restoration for portable electrocardiogram
transportation.
Chapter 6--Part B Premium and Related Provisions
subchapter a--determination of part b premium amount
Sec. 4571. Part B premium.
subchapter b--other provisions related to part b premium
Sec. 4581. Protections under the medicare program for disabled workers
who lose benefits under a group health plan.
Sec. 4582. Governmental entities eligible to elect to pay part B
premiums for eligible individuals.
Subtitle G--Provisions Relating to Parts A and B
Chapter 1--Home Health Services and Benefits
subchapter a--payments for home health services
Sec. 4601. Recapturing savings resulting from temporary freeze on
payment increases for home health services.
Sec. 4602. Interim payments for home health services.
Sec. 4603. Prospective payment for home health services.
Sec. 4604. Payment based on location where home health service is
furnished.
subchapter b--home health benefits
Sec. 4611. Modification of part A home health benefit for individuals
enrolled under part B.
Sec. 4612. Clarification of part-time or intermittent nursing care.
Sec. 4613. Study on definition of homebound.
Sec. 4614. Normative standards for home health claims denials.
Sec. 4615. No home health benefits based solely on drawing blood.
Sec. 4616. Reports to Congress regarding home health cost containment.
Chapter 2--Graduate Medical Education
subchapter a--indirect medical education
Sec. 4621. Indirect graduate medical education payments.
Sec. 4622. Payment to hospitals of indirect medical education costs for
Medicare+Choice enrollees.
[[Page 111 STAT. 274]]
subchapter b--direct graduate medical education
Sec. 4623. Limitation on number of residents and rolling average FTE
count.
Sec. 4624. Payments to hospitals for direct costs of graduate medical
education of Medicare+Choice enrollees.
Sec. 4625. Permitting payment to nonhospital providers.
Sec. 4626. Incentive payments under plans for voluntary reduction in
number of residents.
Sec. 4627. Medicare special reimbursement rule for primary care combined
residency programs.
Sec. 4628. Demonstration project on use of consortia.
Sec. 4629. Recommendations on long-term policies regarding teaching
hospitals and graduate medical education.
Sec. 4630. Study of hospital overhead and supervisory physician
components of direct medical education costs.
Chapter 3--Provisions Relating to Medicare Secondary Payer
Sec. 4631. Permanent extension and revision of certain secondary payer
provisions.
Sec. 4632. Clarification of time and filing limitations.
Sec. 4633. Permitting recovery against third party administrators.
Chapter 4--Other Provisions
Sec. 4641. Placement of advance directive in medical record.
Sec. 4642. Increased certification period for certain organ procurement
organizations.
Sec. 4643. Office of the Chief Actuary in the Health Care Financing
Administration.
Sec. 4644. Conforming amendments to comply with congressional review of
agency rulemaking.
Subtitle H--Medicaid
Chapter 1--Managed Care
Sec. 4701. State option of using managed care; change in terminology.
Sec. 4702. Primary care case management services as State option without
need for waiver.
Sec. 4703. Elimination of 75:25 restriction on risk contracts.
Sec. 4704. Increased beneficiary protections.
Sec. 4705. Quality assurance standards.
Sec. 4706. Solvency standards.
Sec. 4707. Protections against fraud and abuse.
Sec. 4708. Improved administration.
Sec. 4709. 6-month guaranteed eligibility for all individuals enrolled
in managed care.
Sec. 4710. Effective dates.
Chapter 2--Flexibility In Payment of Providers
Sec. 4711. Flexibility in payment methods for hospital, nursing
facility, ICF/MR, and home health services.
Sec. 4712. Payment for center and clinic services.
Sec. 4713. Elimination of obstetrical and pediatric payment rate
requirements.
Sec. 4714. Medicaid payment rates for certain medicare cost-sharing.
Sec. 4715. Treatment of veterans' pensions under medicaid.
Chapter 3--Federal Payments to States
Sec. 4721. Reforming disproportionate share payments under State
medicaid programs.
Sec. 4722. Treatment of State taxes imposed on certain hospitals.
Sec. 4723. Additional funding for State emergency health services
furnished to undocumented aliens.
Sec. 4724. Elimination of waste, fraud, and abuse.
Sec. 4725. Increased FMAPs.
Sec. 4726. Increase in payment limitation for territories.
Chapter 4--Eligibility
Sec. 4731. State option of continuous eligibility for 12 months;
clarification of State option to cover children.
Sec. 4732. Payment of part B premiums.
Sec. 4733. State option to permit workers with disabilities to buy into
medicaid.
Sec. 4734. Penalty for fraudulent eligibility.
Sec. 4735. Treatment of certain settlement payments.
[[Page 111 STAT. 275]]
Chapter 5--Benefits
Sec. 4741. Elimination of requirement to pay for private insurance.
Sec. 4742. Physician qualification requirements.
Sec. 4743. Elimination of requirement of prior institutionalization with
respect to habilitation services furnished under a waiver for
home or community-based services.
Sec. 4744. Study and report on EPSDT benefit.
Chapter 6--Administration and Miscellaneous
Sec. 4751. Elimination of duplicative inspection of care requirements
for ICFS/MR and mental hospitals.
Sec. 4752. Alternative sanctions for noncompliant ICFS/MR.
Sec. 4753. Modification of MMIS requirements.
Sec. 4754. Facilitating imposition of State alternative remedies on
noncompliant nursing facilities.
Sec. 4755. Removal of name from nurse aide registry.
Sec. 4756. Medically accepted indication.
Sec. 4757. Continuation of State-wide section 1115 medicaid waivers.
Sec. 4758. Extension of moratorium.
Sec. 4759. Extension of effective date for State law amendment.
Subtitle I--Programs of All-Inclusive Care for the Elderly (PACE)
Sec. 4801. Coverage of PACE under the medicare program.
Sec. 4802. Establishment of PACE program as medicaid State option.
Sec. 4803. Effective date; transition.
Sec. 4804. Study and reports.
Subtitle J--State Children's Health Insurance Program
Chapter 1--State Children's Health Insurance Program
Sec. 4901. Establishment of program.
``TITLE XXI--STATE CHILDREN'S HEALTH INSURANCE PROGRAM
``Sec. 2101. Purpose; State child health plans.
``Sec. 2102. General contents of State child health plan;
eligibility; outreach.
``Sec. 2103. Coverage requirements for children's health
insurance.
``Sec. 2104. Allotments.
``Sec. 2105. Payments to States.
``Sec. 2106. Process for submission, approval, and amendment of
State child health plans.
``Sec. 2107. Strategic objectives and performance goals; plan
administration.
``Sec. 2108. Annual reports; evaluations.
``Sec. 2109. Miscellaneous provisions.
``Sec. 2110. Definitions.
Chapter 2--Expanded Coverage of Children Under Medicaid
Sec. 4911. Optional use of State child health assistance funds for
enhanced medicaid match for expanded medicaid eligibility.
Sec. 4912. Medicaid presumptive eligibility for low-income children.
Sec. 4913. Continuation of medicaid eligibility for disabled children
who lose SSI benefits.
Chapter 3--Diabetes Grant Programs
Sec. 4921. Special diabetes programs for children with Type I diabetes.
Sec. 4922. Special diabetes programs for Indians.
Sec. 4923. Report on diabetes grant programs.
Subtitle A--Medicare+Choice Program
CHAPTER 1--MEDICARE+CHOICE PROGRAM
Subchapter A--Medicare+Choice Program
SEC. 4001. ESTABLISHMENT OF MEDICARE+CHOICE PROGRAM.
Title XVIII is amended by redesignating part C as part D and by
inserting after part B the following new part:
[[Page 111 STAT. 276]]
``Part C--Medicare+Choice Program
``eligibility, election, and enrollment
``Sec. 1851. <<NOTE: 42 USC 1395w-21.>> (a) Choice of Medicare
Benefits Through Medicare+Choice Plans.--
``(1) In general.--Subject to the provisions of this
section, each Medicare+Choice eligible individual (as defined in
paragraph (3)) is entitled to elect to receive benefits under
this title--
``(A) through the original medicare fee-for-service
program under parts A and B, or
``(B) through enrollment in a Medicare+Choice plan
under this part.
``(2) Types of medicare+choice plans that may be
available.--A Medicare+Choice plan may be any of the following
types of plans of health insurance:
``(A) Coordinated care plans.--Coordinated care
plans which provide health care services, including but
not limited to health maintenance organization plans
(with or without point of service options), plans
offered by provider-sponsored organizations (as defined
in section 1855(d)), and preferred provider organization
plans.
``(B) Combination of msa plan and contributions to
medicare+choice msa.--An MSA plan, as defined in section
1859(b)(3), and a contribution into a Medicare+Choice
medical savings account (MSA).
``(C) Private fee-for-service plans.--A
Medicare+Choice private fee-for-service plan, as defined
in section 1859(b)(2).
``(3) Medicare+choice eligible individual.--
``(A) In general.--In this title, subject to
subparagraph (B), the term `Medicare+Choice eligible
individual' means an individual who is entitled to
benefits under part A and enrolled under part B.
``(B) Special rule for end-stage renal disease.--
Such term shall not include an individual medically
determined to have end-stage renal disease, except that
an individual who develops end-stage renal disease while
enrolled in a Medicare+Choice plan may continue to be
enrolled in that plan.
``(b) Special Rules.--
``(1) Residence requirement.--
``(A) In general.--Except as the Secretary may
otherwise provide, an individual is eligible to elect a
Medicare+Choice plan offered by a Medicare+Choice
organization only if the plan serves the geographic area
in which the individual resides.
``(B) Continuation of enrollment permitted.--
Pursuant to rules specified by the Secretary, the
Secretary shall provide that a plan may offer to all
individuals residing in a geographic area the option to
continue enrollment in the plan, notwithstanding that
the individual no longer resides in the service area of
the plan, so long as the plan provides that individuals
exercising this option have, as part of the basic
benefits described in section 1852(a)(1)(A), reasonable
access within that geographic
[[Page 111 STAT. 277]]
area to the full range of basic benefits, subject to
reasonable cost sharing liability in obtaining such
benefits.
``(2) Special rule for certain individuals covered under
fehbp or eligible for veterans or military health benefits,
veterans.--
``(A) FEHBP.--An individual who is enrolled in a
health benefit plan under chapter 89 of title 5, United
States Code, is not eligible to enroll in an MSA plan
until such time as the Director of the Office of
Management and Budget certifies to the Secretary that
the Office of Personnel Management has adopted policies
which will ensure that the enrollment of such
individuals in such plans will not result in increased
expenditures for the Federal Government for health
benefit plans under such chapter.
``(B) VA and dod.--The Secretary may apply rules
similar to the rules described in subparagraph (A) in
the case of individuals who are eligible for health care
benefits under chapter 55 of title 10, United States
Code, or under chapter 17 of title 38 of such Code.
``(3) Limitation on eligibility of qualified medicare
beneficiaries and other medicaid beneficiaries to enroll in an
msa plan.--An individual who is a qualified medicare beneficiary
(as defined in section 1905(p)(1)), a qualified disabled and
working individual (described in section 1905(s)), an individual
described in section 1902(a)(10)(E)(iii), or otherwise entitled
to medicare cost-sharing under a State plan under title XIX is
not eligible to enroll in an MSA plan.
``(4) Coverage under msa plans on a demonstration basis.--
``(A) In general.--An individual is not eligible to
enroll in an MSA plan under this part--
``(i) on or after January 1, 2003, unless the
enrollment is the continuation of such an
enrollment in effect as of such date; or
``(ii) as of any date if the number of such
individuals so enrolled as of such date has
reached 390,000.
Under rules established by the Secretary, an individual
is not eligible to enroll (or continue enrollment) in an
MSA plan for a year unless the individual provides
assurances satisfactory to the Secretary that the
individual will reside in the United States for at least
183 days during the year.
``(B) Evaluation.--The Secretary shall regularly
evaluate the impact of permitting enrollment in MSA
plans under this part on selection (including adverse
selection), use of preventive care, access to care, and
the financial status of the Trust Funds under this
title.
``(C) Reports.--The Secretary shall submit to
Congress periodic reports on the numbers of individuals
enrolled in such plans and on the evaluation being
conducted under subparagraph (B). The Secretary shall
submit such a report, by not later than March 1, 2002,
on whether the time limitation under subparagraph (A)(i)
should be extended or removed and whether to change the
numerical limitation under subparagraph (A)(ii).
``(c) Process for Exercising Choice.--
[[Page 111 STAT. 278]]
``(1) In general.--The Secretary shall establish a process
through which elections described in subsection (a) are made and
changed, including the form and manner in which such elections
are made and changed. Such elections shall be made or changed
only during coverage election periods specified under subsection
(e) and shall become effective as provided in subsection (f).
``(2) Coordination through medicare+choice organizations.--
``(A) Enrollment.--Such process shall permit an
individual who wishes to elect a Medicare+Choice plan
offered by a Medicare+Choice organization to make such
election through the filing of an appropriate election
form with the organization.
``(B) Disenrollment.--Such process shall permit an
individual, who has elected a Medicare+Choice plan
offered by a Medicare+Choice organization and who wishes
to terminate such election, to terminate such election
through the filing of an appropriate election form with
the organization.
``(3) Default.--
``(A) Initial election.--
``(i) In general.--Subject to clause (ii), an
individual who fails to make an election during an
initial election period under subsection (e)(1) is
deemed to have chosen the original medicare fee-
for-service program option.
``(ii) Seamless continuation of coverage.--The
Secretary may establish procedures under which an
individual who is enrolled in a health plan (other
than Medicare+Choice plan) offered by a
Medicare+Choice organization at the time of the
initial election period and who fails to elect to
receive coverage other than through the
organization is deemed to have elected the
Medicare+Choice plan offered by the organization
(or, if the organization offers more than one such
plan, such plan or plans as the Secretary
identifies under such procedures).
``(B) Continuing periods.--An individual who has
made (or is deemed to have made) an election under this
section is considered to have continued to make such
election until such time as--
``(i) the individual changes the election
under this section, or
``(ii) the Medicare+Choice plan with respect
to which such election is in effect is
discontinued or, subject to subsection (b)(1)(B),
no longer serves the area in which the individual
resides.
``(d) Providing Information To Promote Informed Choice.--
``(1) In general.--The Secretary shall provide for
activities under this subsection to broadly disseminate
information to medicare beneficiaries (and prospective medicare
beneficiaries) on the coverage options provided under this
section in order to promote an active, informed selection among
such options.
``(2) Provision of notice.--
``(A) Open season notification.--At least 15 days
before the beginning of each annual, coordinated
election
[[Page 111 STAT. 279]]
period (as defined in subsection (e)(3)(B)), the
Secretary shall mail to each Medicare+Choice eligible
individual residing in an area the following:
``(i) General information.--The general
information described in paragraph (3).
``(ii) List of plans and comparison of plan
options.--A list identifying the Medicare+Choice
plans that are (or will be) available to residents
of the area and information described in paragraph
(4) concerning such plans. Such information shall
be presented in a comparative form.
``(iii) Additional information.--Any other
information that the Secretary determines will
assist the individual in making the election under
this section.
The mailing of such information shall be coordinated, to
the extent practicable, with the mailing of any annual
notice under section 1804.
``(B) Notification to newly eligible medicare+choice
eligible individuals.--To the extent practicable, the
Secretary shall, not later than 30 days before the
beginning of the initial Medicare+Choice enrollment
period for an individual described in subsection (e)(1),
mail to the individual the information described in
subparagraph (A).
``(C) Form.--The information disseminated under this
paragraph shall be written and formatted using language
that is easily understandable by medicare beneficiaries.
``(D) Periodic updating.--The information described
in subparagraph (A) shall be updated on at least an
annual basis to reflect changes in the availability of
Medicare+Choice plans and the benefits and
Medicare+Choice monthly basic and supplemental
beneficiary premiums for such plans.
``(3) General information.--General information under this
paragraph, with respect to coverage under this part during a
year, shall include the following:
``(A) Benefits under original medicare fee-for-
service program option.--A general description of the
benefits covered under the original medicare fee-for-
service program under parts A and B, including--
``(i) covered items and services,
``(ii) beneficiary cost sharing, such as
deductibles, coinsurance, and copayment amounts,
and
``(iii) any beneficiary liability for balance
billing.
``(B) Election procedures.--Information and
instructions on how to exercise election options under
this section.
``(C) Rights.--A general description of procedural
rights (including grievance and appeals procedures) of
beneficiaries under the original medicare fee-for-
service program and the Medicare+Choice program and the
right to be protected against discrimination based on
health status-related factors under section 1852(b).
``(D) Information on medigap and medicare select.--A
general description of the benefits, enrollment rights,
and other requirements applicable to medicare
supplemental policies under section 1882 and provisions
[[Page 111 STAT. 280]]
relating to medicare select policies described in
section 1882(t).
``(E) Potential for contract termination.--The fact
that a Medicare+Choice organization may terminate its
contract, refuse to renew its contract, or reduce the
service area included in its contract, under this part,
and the effect of such a termination, nonrenewal, or
service area reduction may have on individuals enrolled
with the Medicare+Choice plan under this part.
``(4) Information comparing plan options.--Information under
this paragraph, with respect to a Medicare+Choice plan for a
year, shall include the following:
``(A) Benefits.--The benefits covered under the
plan, including the following:
``(i) Covered items and services beyond those
provided under the original medicare fee-for-
service program.
``(ii) Any beneficiary cost sharing.
``(iii) Any maximum limitations on out-of-
pocket expenses.
``(iv) In the case of an MSA plan, differences
in cost sharing, premiums, and balance billing
under such a plan compared to under other
Medicare+Choice plans.
``(v) In the case of a Medicare+Choice private
fee-for-service plan, differences in cost sharing,
premiums, and balance billing under such a plan
compared to under other Medicare+Choice plans.
``(vi) The extent to which an enrollee may
obtain benefits through out-of-network health care
providers.
``(vii) The extent to which an enrollee may
select among in-network providers and the types of
providers participating in the plan's network.
``(viii) The organization's coverage of
emergency and urgently needed care.
``(B) Premiums.--The Medicare+Choice monthly basic
beneficiary premium and Medicare+Choice monthly
supplemental beneficiary premium, if any, for the plan
or, in the case of an MSA plan, the Medicare+Choice
monthly MSA premium.
``(C) Service area.--The service area of the plan.
``(D) Quality and performance.--To the extent
available, plan quality and performance indicators for
the benefits under the plan (and how they compare to
such indicators under the original medicare fee-for-
service program under parts A and B in the area
involved), including--
``(i) disenrollment rates for medicare
enrollees electing to receive benefits through the
plan for the previous 2 years (excluding
disenrollment due to death or moving outside the
plan's service area),
``(ii) information on medicare enrollee
satisfaction,
``(iii) information on health outcomes, and
``(iv) the recent record regarding compliance
of the plan with requirements of this part (as
determined by the Secretary).
``(E) Supplemental benefits.--Whether the
organization offering the plan includes mandatory
supplemental
[[Page 111 STAT. 281]]
benefits in its base benefit package or offers optional
supplemental benefits and the terms and conditions
(including premiums) for such coverage.
``(5) Maintaining a toll-free number and internet site.--The
Secretary shall maintain a toll-free number for inquiries
regarding Medicare+Choice options and the operation of this part
in all areas in which Medicare+Choice plans are offered and an
Internet site through which individuals may electronically
obtain information on such options and Medicare+Choice plans.
``(6) Use of non-federal entities.--The Secretary may enter
into contracts with non-Federal entities to carry out activities
under this subsection.
``(7) Provision of information.--A Medicare+Choice
organization shall provide the Secretary with such information
on the organization and each Medicare+Choice plan it offers as
may be required for the preparation of the information referred
to in paragraph (2)(A).
``(e) Coverage Election Periods.--
``(1) Initial choice upon eligibility to make election if
medicare+choice plans available to individual.--If, at the time
an individual first becomes entitled to benefits under part A
and enrolled under part B, there is one or more Medicare+Choice
plans offered in the area in which the individual resides, the
individual shall make the election under this section during a
period specified by the Secretary such that if the individual
elects a Medicare+Choice plan during the period, coverage under
the plan becomes effective as of the first date on which the
individual may receive such coverage.
``(2) Open enrollment and disenrollment opportunities.--
Subject to paragraph (5)--
``(A) Continuous open enrollment and disenrollment
through 2001.--At any time during 1998, 1999, 2000, and
2001, a Medicare+Choice eligible individual may change
the election under subsection (a)(1).
``(B) Continuous open enrollment and disenrollment
for first 6 months during 2002.--
``(i) In general.--Subject to clause (ii), at
any time during the first 6 months of 2002, or, if
the individual first becomes a Medicare+Choice
eligible individual during 2002, during the first
6 months during 2002 in which the individual is a
Medicare+Choice eligible individual, a
Medicare+Choice eligible individual may change the
election under subsection (a)(1).
``(ii) Limitation of one change.--An
individual may exercise the right under clause (i)
only once. The limitation under this clause shall
not apply to changes in elections effected during
an annual, coordinated election period under
paragraph (3) or during a special enrollment
period under the first sentence of paragraph (4).
``(C) Continuous open enrollment and disenrollment
for first 3 months in subsequent years.--
``(i) In general.--Subject to clause (ii), at
any time during the first 3 months of a year after
2002, or, if the individual first becomes a
Medicare+Choice
[[Page 111 STAT. 282]]
eligible individual during a year after 2002,
during the first 3 months of such year in which
the individual is a Medicare+Choice eligible
individual, a Medicare+Choice eligible individual
may change the election under subsection (a)(1).
``(ii) Limitation of one change during open
enrollment period each year.--An individual may
exercise the right under clause (i) only once
during the applicable 3-month period described in
such clause in each year. The limitation under
this clause shall not apply to changes in
elections effected during an annual, coordinated
election period under paragraph (3) or during a
special enrollment period under paragraph (4).
``(3) Annual, coordinated election period.--
``(A) In general.--Subject to paragraph (5), each
individual who is eligible to make an election under
this section may change such election during an annual,
coordinated election period.
``(B) Annual, coordinated election period.--For
purposes of this section, the term `annual, coordinated
election period' means, with respect to a calendar year
(beginning with 2000), the month of November before such
year.
``(C) Medicare+choice health information fairs.--In
the month of November of each year (beginning with
1999), in conjunction with the annual coordinated
election period defined in subparagraph (B), the
Secretary shall provide for a nationally coordinated
educational and publicity campaign to inform
Medicare+Choice eligible individuals about
Medicare+Choice plans and the election process provided
under this section.
``(D) Special information campaign in 1998.--During
November 1998 the Secretary shall provide for an
educational and publicity campaign to inform
Medicare+Choice eligible individuals about the
availability of Medicare+Choice plans, and eligible
organizations with risk-sharing contracts under section
1876, offered in different areas and the election
process provided under this section.
``(4) Special election periods.--Effective as of January 1,
2002, an individual may discontinue an election of a
Medicare+Choice plan offered by a Medicare+Choice organization
other than during an annual, coordinated election period and
make a new election under this section if--
``(A) the organization's or plan's certification
under this part has been terminated or the organization
has terminated or otherwise discontinued providing the
plan in the area in which the individual resides;
``(B) the individual is no longer eligible to elect
the plan because of a change in the individual's place
of residence or other change in circumstances (specified
by the Secretary, but not including termination of the
individual's enrollment on the basis described in clause
(i) or (ii) of subsection (g)(3)(B));
``(C) the individual demonstrates (in accordance
with guidelines established by the Secretary) that--
[[Page 111 STAT. 283]]
``(i) the organization offering the plan
substantially violated a material provision of the
organization's contract under this part in
relation to the individual (including the failure
to provide an enrollee on a timely basis medically
necessary care for which benefits are available
under the plan or the failure to provide such
covered care in accordance with applicable quality
standards); or
``(ii) the organization (or an agent or other
entity acting on the organization's behalf)
materially misrepresented the plan's provisions in
marketing the plan to the individual; or
``(D) the individual meets such other exceptional
conditions as the Secretary may provide.
Effective as of January 1, 2002, an individual who, upon first
becoming eligible for benefits under part A at age 65, enrolls
in a Medicare+Choice plan under this part, the individual may
discontinue the election of such plan, and elect coverage under
the original fee-for-service plan, at any time during the 12-
month period beginning on the effective date of such enrollment.
``(5) Special rules for msa plans.--Notwithstanding the
preceding provisions of this subsection, an individual--
``(A) may elect an MSA plan only during--
``(i) an initial open enrollment period
described in paragraph (1),
``(ii) an annual, coordinated election period
described in paragraph (3)(B), or
``(iii) the month of November 1998;
``(B) subject to subparagraph (C), may not
discontinue an election of an MSA plan except during the
periods described in clause (ii) or (iii) of
subparagraph (A) and under the first sentence of
paragraph (4); and
``(C) who elects an MSA plan during an annual,
coordinated election period, and who never previously
had elected such a plan, may revoke such election, in a
manner determined by the Secretary, by not later than
December 15 following the date of the election.
``(6) Open enrollment periods.--Subject to paragraph (5), a
Medicare+Choice organization--
``(A) shall accept elections or changes to elections
during the initial enrollment periods described in
paragraph (1), during the month of November 1998 and
each subsequent year (as provided in paragraph (3)), and
during special election periods described in the first
sentence of paragraph (4); and
``(B) may accept other changes to elections at such
other times as the organization provides.
``(f) Effectiveness of Elections and Changes of Elections.--
``(1) During initial coverage election period.--An election
of coverage made during the initial coverage election period
under subsection (e)(1)(A) shall take effect upon the date the
individual becomes entitled to benefits under part A and
enrolled under part B, except as the Secretary may provide
(consistent with section 1838) in order to prevent retroactive
coverage.
[[Page 111 STAT. 284]]
``(2) During continuous open enrollment periods.--An
election or change of coverage made under subsection (e)(2)
shall take effect with the first day of the first calendar month
following the date on which the election is made.
``(3) Annual, coordinated election period.--An election or
change of coverage made during an annual, coordinated election
period (as defined in subsection (e)(3)(B)) in a year shall take
effect as of the first day of the following year.
``(4) Other periods.--An election or change of coverage made
during any other period under subsection (e)(4) shall take
effect in such manner as the Secretary provides in a manner
consistent (to the extent practicable) with protecting
continuity of health benefit coverage.
``(g) Guaranteed Issue and Renewal.--
``(1) In general.--Except as provided in this subsection, a
Medicare+Choice organization shall provide that at any time
during which elections are accepted under this section with
respect to a Medicare+Choice plan offered by the organization,
the organization will accept without restrictions individuals
who are eligible to make such election.
``(2) Priority.--If the Secretary determines that a
Medicare+Choice organization, in relation to a Medicare+Choice
plan it offers, has a capacity limit and the number of
Medicare+Choice eligible individuals who elect the plan under
this section exceeds the capacity limit, the organization may
limit the election of individuals of the plan under this section
but only if priority in election is provided--
``(A) first to such individuals as have elected the
plan at the time of the determination, and
``(B) then to other such individuals in such a
manner that does not discriminate, on a basis described
in section 1852(b), among the individuals (who seek to
elect the plan).
The preceding sentence shall not apply if it would result in the
enrollment of enrollees substantially nonrepresentative, as
determined in accordance with regulations of the Secretary, of
the medicare population in the service area of the plan.
``(3) Limitation on termination of election.--
``(A) In general.--Subject to subparagraph (B), a
Medicare+Choice organization may not for any reason
terminate the election of any individual under this
section for a Medicare+Choice plan it offers.
``(B) Basis for termination of election.--A
Medicare+Choice organization may terminate an
individual's election under this section with respect to
a Medicare+Choice plan it offers if--
``(i) any Medicare+Choice monthly basic and
supplemental beneficiary premiums required with
respect to such plan are not paid on a timely
basis (consistent with standards under section
1856 that provide for a grace period for late
payment of such premiums),
``(ii) the individual has engaged in
disruptive behavior (as specified in such
standards), or
``(iii) the plan is terminated with respect to
all individuals under this part in the area in
which the individual resides.
``(C) Consequence of termination.--
[[Page 111 STAT. 285]]
``(i) Terminations for cause.--Any individual
whose election is terminated under clause (i) or
(ii) of subparagraph (B) is deemed to have elected
the original medicare fee-for-service program
option described in subsection (a)(1)(A).
``(ii) Termination based on plan termination
or service area reduction.--Any individual whose
election is terminated under subparagraph (B)(iii)
shall have a special election period under
subsection (e)(4)(A) in which to change coverage
to coverage under another Medicare+Choice plan.
Such an individual who fails to make an election
during such period is deemed to have chosen to
change coverage to the original medicare fee-for-
service program option described in subsection
(a)(1)(A).
``(D) Organization obligation with respect to
election forms.--Pursuant to a contract under section
1857, each Medicare+Choice organization receiving an
election form under subsection (c)(2) shall transmit to
the Secretary (at such time and in such manner as the
Secretary may specify) a copy of such form or such other
information respecting the election as the Secretary may
specify.
``(h) Approval of Marketing Material and Application Forms.--
``(1) Submission.--No marketing material or application form
may be distributed by a Medicare+Choice organization to (or for
the use of) Medicare+Choice eligible individuals unless--
``(A) at least 45 days before the date of
distribution the organization has submitted the material
or form to the Secretary for review, and
``(B) the Secretary has not disapproved the
distribution of such material or form.
``(2) Review.--The standards established under section 1856
shall include guidelines for the review of any material or form
submitted and under such guidelines the Secretary shall
disapprove (or later require the correction of) such material or
form if the material or form is materially inaccurate or
misleading or otherwise makes a material misrepresentation.
``(3) Deemed approval (1-stop shopping).--In the case of
material or form that is submitted under paragraph (1)(A) to the
Secretary or a regional office of the Department of Health and
Human Services and the Secretary or the office has not
disapproved the distribution of marketing material or form under
paragraph (1)(B) with respect to a Medicare+Choice plan in an
area, the Secretary is deemed not to have disapproved such
distribution in all other areas covered by the plan and
organization except with regard to that portion of such material
or form that is specific only to an area involved.
``(4) Prohibition of certain marketing practices.--Each
Medicare+Choice organization shall conform to fair marketing
standards, in relation to Medicare+Choice plans offered under
this part, included in the standards established under section
1856. Such standards--
[[Page 111 STAT. 286]]
``(A) shall not permit a Medicare+Choice
organization to provide for cash or other monetary
rebates as an inducement for enrollment or otherwise,
and
``(B) may include a prohibition against a
Medicare+Choice organization (or agent of such an
organization) completing any portion of any election
form used to carry out elections under this section on
behalf of any individual.
``(i) Effect of Election of Medicare+Choice Plan Option.--
``(1) Payments to organizations.--Subject to sections
1852(a)(5), 1853(g), 1853(h), 1886(d)(11), and 1886(h)(3)(D),
payments under a contract with a Medicare+Choice organization
under section 1853(a) with respect to an individual electing a
Medicare+Choice plan offered by the organization shall be
instead of the amounts which (in the absence of the contract)
would otherwise be payable under parts A and B for items and
services furnished to the individual.
``(2) Only organization entitled to payment.--Subject to
sections 1853(e), 1853(g), 1853(h), 1857(f)(2), and 1886(d)(11),
and 1886(h)(3)(D), only the Medicare+Choice organization shall
be entitled to receive payments from the Secretary under this
title for services furnished to the individual.
``benefits and beneficiary protections
``Sec. 1852. <<NOTE: 42 USC 1395w-22.>> (a) Basic Benefits.--
``(1) In general.--Except as provided in section 1859(b)(3)
for MSA plans, each Medicare+Choice plan shall provide to
members enrolled under this part, through providers and other
persons that meet the applicable requirements of this title and
part A of title XI--
``(A) those items and services (other than hospice
care) for which benefits are available under parts A and
B to individuals residing in the area served by the
plan, and
``(B) additional benefits required under section
1854(f)(1)(A).
``(2) Satisfaction of requirement.--
``(A) In general.--A Medicare+Choice plan (other
than an MSA plan) offered by a Medicare+Choice
organization satisfies paragraph (1)(A), with respect to
benefits for items and services furnished other than
through a provider or other person that has a contract
with the organization offering the plan, if the plan
provides payment in an amount so that--
``(i) the sum of such payment amount and any
cost sharing provided for under the plan, is equal
to at least
``(ii) the total dollar amount of payment for
such items and services as would otherwise be
authorized under parts A and B (including any
balance billing permitted under such parts).
``(B) Reference to related provisions.--For
provision relating to--
``(i) limitations on balance billing against
Medicare+Choice organizations for non-contract
providers, see sections 1852(k) and 1866(a)(1)(O),
and
``(ii) limiting actuarial value of enrollee
liability for covered benefits, see section
1854(e).
[[Page 111 STAT. 287]]
``(3) Supplemental benefits.--
``(A) Benefits included subject to secretary's
approval.--Each Medicare+Choice organization may provide
to individuals enrolled under this part, other than
under an MSA plan, (without affording those individuals
an option to decline the coverage) supplemental health
care benefits that the Secretary may approve. The
Secretary shall approve any such supplemental benefits
unless the Secretary determines that including such
supplemental benefits would substantially discourage
enrollment by Medicare+Choice eligible individuals with
the organization.
``(B) At enrollees' option.--
``(i) In general.--Subject to clause (ii), a
Medicare+Choice organization may provide to
individuals enrolled under this part supplemental
health care benefits that the individuals may
elect, at their option, to have covered.
``(ii) Special rule for msa plans.--A
Medicare+Choice organization may not provide,
under an MSA plan, supplemental health care
benefits that cover the deductible described in
section 1859(b)(2)(B). In applying the previous
sentence, health benefits described in section
1882(u)(2)(B) shall not be treated as covering
such deductible.
``(C) Application to Medicare+Choice private fee-
for-service plans.--Nothing in this paragraph shall be
construed as preventing a Medicare+Choice private fee-
for-service plan from offering supplemental benefits
that include payment for some or all of the balance
billing amounts permitted consistent with section
1852(k) and coverage of additional services that the
plan finds to be medically necessary.
``(4) Organization as secondary payer.--Notwithstanding any
other provision of law, a Medicare+Choice organization may (in
the case of the provision of items and services to an individual
under a Medicare+Choice plan under circumstances in which
payment under this title is made secondary pursuant to section
1862(b)(2)) charge or authorize the provider of such services to
charge, in accordance with the charges allowed under a law,
plan, or policy described in such section--
``(A) the insurance carrier, employer, or other
entity which under such law, plan, or policy is to pay
for the provision of such services, or
``(B) such individual to the extent that the
individual has been paid under such law, plan, or policy
for such services.
``(5) National coverage determinations.--If there is a
national coverage determination made in the period beginning on
the date of an announcement under section 1853(b) and ending on
the date of the next announcement under such section and the
Secretary projects that the determination will result in a
significant change in the costs to a Medicare+Choice
organization of providing the benefits that are the subject of
such national coverage determination and that such change in
costs was not incorporated in the determination of the annual
Medicare+Choice capitation rate under section 1853 included
[[Page 111 STAT. 288]]
in the announcement made at the beginning of such period, then,
unless otherwise required by law--
``(A) such determination shall not apply to
contracts under this part until the first contract year
that begins after the end of such period, and
``(B) if such coverage determination provides for
coverage of additional benefits or coverage under
additional circumstances, section 1851(i)(1) shall not
apply to payment for such additional benefits or
benefits provided under such additional circumstances
until the first contract year that begins after the end
of such period.
``(b) Antidiscrimination.--
``(1) Beneficiaries.--
``(A) In general.--A Medicare+Choice organization
may not deny, limit, or condition the coverage or
provision of benefits under this part, for individuals
permitted to be enrolled with the organization under
this part, based on any health status-related factor
described in section 2702(a)(1) of the Public Health
Service Act.
``(B) Construction.--Subparagraph (A) shall not be
construed as requiring a Medicare+Choice organization to
enroll individuals who are determined to have end-stage
renal disease, except as provided under section
1851(a)(3)(B).
``(2) Providers.--A Medicare+Choice organization shall not
discriminate with respect to participation, reimbursement, or
indemnification as to any provider who is acting within the
scope of the provider's license or certification under
applicable State law, solely on the basis of such license or
certification. This paragraph shall not be construed to prohibit
a plan from including providers only to the extent necessary to
meet the needs of the plan's enrollees or from establishing any
measure designed to maintain quality and control costs
consistent with the responsibilities of the plan.
``(c) Disclosure Requirements.--
``(1) Detailed description of plan provisions.--A
Medicare+Choice organization shall disclose, in clear, accurate,
and standardized form to each enrollee with a Medicare+Choice
plan offered by the organization under this part at the time of
enrollment and at least annually thereafter, the following
information regarding such plan:
``(A) Service area.--The plan's service area.
``(B) Benefits.--Benefits offered under the plan,
including information described in section 1851(d)(3)(A)
and exclusions from coverage and, if it is an MSA plan,
a comparison of benefits under such a plan with benefits
under other Medicare+Choice plans.
``(C) Access.--The number, mix, and distribution of
plan providers, out-of-network coverage (if any)
provided by the plan, and any point-of-service option
(including the supplemental premium for such option).
``(D) Out-of-area coverage.--Out-of-area coverage
provided by the plan.
``(E) Emergency coverage.--Coverage of emergency
services, including--
``(i) the appropriate use of emergency
services, including use of the 911 telephone
system or its local
[[Page 111 STAT. 289]]
equivalent in emergency situations and an
explanation of what constitutes an emergency
situation;
``(ii) the process and procedures of the plan
for obtaining emergency services; and
``(iii) the locations of (I) emergency
departments, and (II) other settings, in which
plan physicians and hospitals provide emergency
services and post-stabilization care.
``(F) Supplemental benefits.--Supplemental benefits
available from the organization offering the plan,
including--
``(i) whether the supplemental benefits are
optional,
``(ii) the supplemental benefits covered, and
``(iii) the Medicare+Choice monthly
supplemental beneficiary premium for the
supplemental benefits.
``(G) Prior authorization rules.--Rules regarding
prior authorization or other review requirements that
could result in nonpayment.
``(H) Plan grievance and appeals procedures.--All
plan appeal or grievance rights and procedures.
``(I) Quality assurance program.--A description of
the organization's quality assurance program under
subsection (e).
``(2) Disclosure upon request.--Upon request of a
Medicare+Choice eligible individual, a Medicare+Choice
organization must provide the following information to such
individual:
``(A) The general coverage information and general
comparative plan information made available under
clauses (i) and (ii) of section 1851(d)(2)(A).
``(B) Information on procedures used by the
organization to control utilization of services and
expenditures.
``(C) Information on the number of grievances,
redeterminations, and appeals and on the disposition in
the aggregate of such matters.
``(D) An overall summary description as to the
method of compensation of participating physicians.
``(d) Access to Services.--
``(1) In general.--A Medicare+Choice organization offering a
Medicare+Choice plan may select the providers from whom the
benefits under the plan are provided so long as--
``(A) the organization makes such benefits available
and accessible to each individual electing the plan
within the plan service area with reasonable promptness
and in a manner which assures continuity in the
provision of benefits;
``(B) when medically necessary the organization
makes such benefits available and accessible 24 hours a
day and 7 days a week;
``(C) the plan provides for reimbursement with
respect to services which are covered under
subparagraphs (A) and (B) and which are provided to such
an individual other than through the organization, if--
``(i) the services were not emergency services
(as defined in paragraph (3)), but (I) the
services were medically necessary and immediately
required because
[[Page 111 STAT. 290]]
of an unforeseen illness, injury, or condition,
and (II) it was not reasonable given the
circumstances to obtain the services through the
organization,
``(ii) the services were renal dialysis
services and were provided other than through the
organization because the individual was
temporarily out of the plan's service area, or
``(iii) the services are maintenance care or
post-stabilization care covered under the
guidelines established under paragraph (2);
``(D) the organization provides access to
appropriate providers, including credentialed
specialists, for medically necessary treatment and
services; and
``(E) coverage is provided for emergency services
(as defined in paragraph (3)) without regard to prior
authorization or the emergency care provider's
contractual relationship with the organization.
``(2) Guidelines respecting coordination of post-
stabilization care.--A Medicare+Choice plan shall comply with
such guidelines as the Secretary may prescribe relating to
promoting efficient and timely coordination of appropriate
maintenance and post-stabilization care of an enrollee after the
enrollee has been determined to be stable under section 1867.
``(3) Definition of emergency services.--In this
subsection--
``(A) In general.--The term `emergency services'
means, with respect to an individual enrolled with an
organization, covered inpatient and outpatient services
that--
``(i) are furnished by a provider that is
qualified to furnish such services under this
title, and
``(ii) are needed to evaluate or stabilize an
emergency medical condition (as defined in
subparagraph (B)).
``(B) Emergency medical condition based on prudent
layperson.--The term `emergency medical condition' means
a medical condition manifesting itself by acute symptoms
of sufficient severity (including severe pain) such that
a prudent layperson, who possesses an average knowledge
of health and medicine, could reasonably expect the
absence of immediate medical attention to result in--
``(i) placing the health of the individual
(or, with respect to a pregnant woman, the health
of the woman or her unborn child) in serious
jeopardy,
``(ii) serious impairment to bodily functions,
or
``(iii) serious dysfunction of any bodily
organ or part.
``(4) Assuring access to services in medicare+choice
private fee-for-service plans.--In addition to any other
requirements under this part, in the case of a
Medicare+Choice private fee-for-service plan, the
organization offering the plan must demonstrate to the
Secretary that the organization has sufficient number
and range of health care professionals and providers
willing
[[Page 111 STAT. 291]]
to provide services under the terms of the plan. The
Secretary shall find that an organization has met such
requirement with respect to any category of health care
professional or provider if, with respect to that
category of provider--
``(A) the plan has established payment rates
for covered services furnished by that category of
provider that are not less than the payment rates
provided for under part A, part B, or both, for
such services, or
``(B) the plan has contracts or agreements
with a sufficient number and range of providers
within such category to provide covered services
under the terms of the plan,
or a combination of both. The previous sentence shall
not be construed as restricting the persons from whom
enrollees under such a plan may obtain covered benefits.
``(e) Quality Assurance Program.--
``(1) In general.--Each Medicare+Choice organization must
have arrangements, consistent with any regulation, for an
ongoing quality assurance program for health care services it
provides to individuals enrolled with Medicare+Choice plans of
the organization.
``(2) Elements of program.--
``(A) In general.--The quality assurance program of
an organization with respect to a Medicare+Choice plan
(other than a Medicare+Choice private fee-for-service
plan or a non-network MSA plan) it offers shall--
``(i) stress health outcomes and provide for
the collection, analysis, and reporting of data
(in accordance with a quality measurement system
that the Secretary recognizes) that will permit
measurement of outcomes and other indices of the
quality of Medicare+Choice plans and
organizations;
``(ii) monitor and evaluate high volume and
high risk services and the care of acute and
chronic conditions;
``(iii) evaluate the continuity and
coordination of care that enrollees receive;
``(iv) be evaluated on an ongoing basis as to
its effectiveness;
``(v) include measures of consumer
satisfaction;
``(vi) provide the Secretary with such access
to information collected as may be appropriate to
monitor and ensure the quality of care provided
under this part;
``(vii) provide review by physicians and other
health care professionals of the process followed
in the provision of such health care services;
``(viii) provide for the establishment of
written protocols for utilization review, based on
current standards of medical practice;
``(ix) have mechanisms to detect both
underutilization and overutilization of services;
``(x) after identifying areas for improvement,
establish or alter practice parameters;
[[Page 111 STAT. 292]]
``(xi) take action to improve quality and
assesses the effectiveness of such action through
systematic followup; and
``(xii) make available information on quality
and outcomes measures to facilitate beneficiary
comparison and choice of health coverage options
(in such form and on such quality and outcomes
measures as the Secretary determines to be
appropriate).
``(B) Elements of program for organizations offering
medicare+choice private fee-for-service plans and non-
network msa plans.--The quality assurance program of an
organization with respect to a Medicare+Choice private
fee-for-service plan or a non-network MSA plan it offers
shall--
``(i) meet the requirements of clauses (i)
through (vi) of subparagraph (A);
``(ii) insofar as it provides for the
establishment of written protocols for utilization
review, base such protocols on current standards
of medical practice; and
``(iii) have mechanisms to evaluate
utilization of services and inform providers and
enrollees of the results of such evaluation.
``(C) Definition of non-network msa plan.--In this
subsection, the term `non-network MSA plan' means an MSA
plan offered by a Medicare+Choice organization that does
not provide benefits required to be provided by this
part, in whole or in part, through a defined set of
providers under contract, or under another arrangement,
with the organization.
``(3) External review.--
``(A) In general.--Each Medicare+Choice organization
shall, for each Medicare+Choice plan it operates, have
an agreement with an independent quality review and
improvement organization approved by the Secretary to
perform functions of the type described in sections
1154(a)(4)(B) and 1154(a)(14) with respect to services
furnished by Medicare+Choice plans for which payment is
made under this title. The previous sentence shall not
apply to a Medicare+Choice private fee-for-service plan
or a non-network MSA plan that does not employ
utilization review.
``(B) Nonduplication of accreditation.--Except in
the case of the review of quality complaints, and
consistent with subparagraph (C), the Secretary shall
ensure that the external review activities conducted
under subparagraph (A) are not duplicative of review
activities conducted as part of the accreditation
process.
``(C) Waiver authority.--The Secretary may waive the
requirement described in subparagraph (A) in the case of
an organization if the Secretary determines that the
organization has consistently maintained an excellent
record of quality assurance and compliance with other
requirements under this part.
``(4) Treatment of accreditation.--The Secretary shall
provide that a Medicare+Choice organization is deemed to meet
requirements of paragraphs (1) and (2) of this subsection and
subsection (h) (relating to confidentiality and accuracy of
[[Page 111 STAT. 293]]
enrollee records) if the organization is accredited (and
periodically reaccredited) by a private organization under a
process that the Secretary has determined assures that the
organization, as a condition of accreditation, applies and
enforces standards with respect to the requirements involved
that are no less stringent than the standards established under
section 1856 to carry out the respective requirements.
``(f) Grievance Mechanism.--Each Medicare+Choice organization must
provide meaningful procedures for hearing and resolving grievances
between the organization (including any entity or individual through
which the organization provides health care services) and enrollees with
Medicare+Choice plans of the organization under this part.
``(g) Coverage Determinations, Reconsiderations, and Appeals.--
``(1) Determinations by organization.--
``(A) In general.--A Medicare+Choice organization
shall have a procedure for making determinations
regarding whether an individual enrolled with the plan
of the organization under this part is entitled to
receive a health service under this section and the
amount (if any) that the individual is required to pay
with respect to such service. Subject to paragraph (3),
such procedures shall provide for such determination to
be made on a timely basis.
``(B) Explanation of determination.--Such a
determination that denies coverage, in whole in part,
shall be in writing and shall include a statement in
understandable language of the reasons for the denial
and a description of the reconsideration and appeals
processes.
``(2) Reconsiderations.--
``(A) In general.--The organization shall provide
for reconsideration of a determination described in
paragraph (1)(B) upon request by the enrollee involved.
The reconsideration shall be within a time period
specified by the Secretary, but shall be made, subject
to paragraph (3), not later than 60 days after the date
of the receipt of the request for reconsideration.
``(B) Physician decision on certain
reconsiderations.--A reconsideration relating to a
determination to deny coverage based on a lack of
medical necessity shall be made only by a physician with
appropriate expertise in the field of medicine which
necessitates treatment who is other than a physician
involved in the initial determination.
``(3) Expedited determinations and reconsiderations.--
``(A) Receipt of requests.--
``(i) Enrollee requests.--An enrollee in a
Medicare+Choice plan may request, either in
writing or orally, an expedited determination
under paragraph (1) or an expedited
reconsideration under paragraph (2) by the
Medicare+Choice organization.
``(ii) Physician requests.--A physician,
regardless whether the physician is affiliated
with the organization or not, may request, either
in writing or orally, such an expedited
determination or reconsideration.
``(B) Organization procedures.--
[[Page 111 STAT. 294]]
``(i) In general.--The Medicare+Choice
organization shall maintain procedures for
expediting organization determinations and
reconsiderations when, upon request of an
enrollee, the organization determines that the
application of the normal time frame for making a
determination (or a reconsideration involving a
determination) could seriously jeopardize the life
or health of the enrollee or the enrollee's
ability to regain maximum function.
``(ii) Expedition required for physician
requests.--In the case of a request for an
expedited determination or reconsideration made
under subparagraph (A)(ii), the organization shall
expedite the determination or reconsideration if
the request indicates that the application of the
normal time frame for making a determination (or a
reconsideration involving a determination) could
seriously jeopardize the life or health of the
enrollee or the enrollee's ability to regain
maximum function
``(iii) Timely response.--In cases described
in clauses (i) and (ii), the organization shall
notify the enrollee (and the physician involved,
as appropriate) of the determination or
reconsideration under time limitations established
by the Secretary, but not later than 72 hours of
the time of receipt of the request for the
determination or reconsideration (or receipt of
the information necessary to make the
determination or reconsideration), or such longer
period as the Secretary may permit in specified
cases.
``(4) Independent <<NOTE: Contracts.>> review of certain
coverage denials.--The Secretary shall contract with an
independent, outside entity to review and resolve in a timely
manner reconsiderations that affirm denial of coverage, in whole
or in part.
``(5) Appeals.--An enrollee with a Medicare+Choice plan of a
Medicare+Choice organization under this part who is dissatisfied
by reason of the enrollee's failure to receive any health
service to which the enrollee believes the enrollee is entitled
and at no greater charge than the enrollee believes the enrollee
is required to pay is entitled, if the amount in controversy is
$100 or more, to a hearing before the Secretary to the same
extent as is provided in section 205(b), and in any such hearing
the Secretary shall make the organization a party. If the amount
in controversy is $1,000 or more, the individual or organization
shall, upon notifying the other party, be entitled to judicial
review of the Secretary's final decision as provided in section
205(g), and both the individual and the organization shall be
entitled to be parties to that judicial review. In applying
subsections (b) and (g) of section 205 as provided in this
paragraph, and in applying section 205(l) thereto, any reference
therein to the Commissioner of Social Security or the Social
Security Administration shall be considered a reference to the
Secretary or the Department of Health and Human Services,
respectively.
``(h) Confidentiality and Accuracy of Enrollee Records.--Insofar as
a Medicare+Choice organization maintains medical
[[Page 111 STAT. 295]]
records or other health information regarding enrollees under this part,
the Medicare+Choice organization shall establish procedures--
``(1) to safeguard the privacy of any individually
identifiable enrollee information;
``(2) to maintain such records and information in a manner
that is accurate and timely, and
``(3) to assure timely access of enrollees to such records
and information.
``(i) Information on Advance Directives.--Each Medicare+Choice
organization shall meet the requirement of section 1866(f) (relating to
maintaining written policies and procedures respecting advance
directives).
``(j) Rules Regarding Provider Participation.--
``(1) Procedures.--Insofar as a Medicare+Choice organization
offers benefits under a Medicare+Choice plan through agreements
with physicians, the organization shall establish reasonable
procedures relating to the participation (under an agreement
between a physician and the organization) of physicians under
such a plan. Such procedures shall include--
``(A) providing notice of the rules regarding
participation,
``(B) providing written notice of participation
decisions that are adverse to physicians, and
``(C) providing a process within the organization
for appealing such adverse decisions, including the
presentation of information and views of the physician
regarding such decision.
``(2) Consultation in medical policies.--A Medicare+Choice
organization shall consult with physicians who have entered into
participation agreements with the organization regarding the
organization's medical policy, quality, and medical management
procedures.
``(3) Prohibiting interference with provider advice to
enrollees.--
``(A) In general.--Subject to subparagraphs (B) and
(C), a Medicare+Choice organization (in relation to an
individual enrolled under a Medicare+Choice plan offered
by the organization under this part) shall not prohibit
or otherwise restrict a covered health care professional
(as defined in subparagraph (D)) from advising such an
individual who is a patient of the professional about
the health status of the individual or medical care or
treatment for the individual's condition or disease,
regardless of whether benefits for such care or
treatment are provided under the plan, if the
professional is acting within the lawful scope of
practice.
``(B) Conscience protection.--Subparagraph (A) shall
not be construed as requiring a Medicare+Choice plan to
provide, reimburse for, or provide coverage of a
counseling or referral service if the Medicare+Choice
organization offering the plan--
``(i) objects to the provision of such service
on moral or religious grounds; and
``(ii) in the manner and through the written
instrumentalities such Medicare+Choice
organization deems appropriate, makes available
information on its policies regarding such service
to prospective enrollees
[[Page 111 STAT. 296]]
before or during enrollment and to enrollees
within 90 days after the date that the
organization or plan adopts a change in policy
regarding such a counseling or referral service.
``(C) Construction.--Nothing in subparagraph (B)
shall be construed to affect disclosure requirements
under State law or under the Employee Retirement Income
Security Act of 1974.
``(D) Health care professional defined.--For
purposes of this paragraph, the term `health care
professional' means a physician (as defined in section
1861(r)) or other health care professional if coverage
for the professional's services is provided under the
Medicare+Choice plan for the services of the
professional. Such term includes a podiatrist,
optometrist, chiropractor, psychologist, dentist,
physician assistant, physical or occupational therapist
and therapy assistant, speech-language pathologist,
audiologist, registered or licensed practical nurse
(including nurse practitioner, clinical nurse
specialist, certified registered nurse anesthetist, and
certified nurse-midwife), licensed certified social
worker, registered respiratory therapist, and certified
respiratory therapy technician.
``(4) Limitations on physician incentive plans.--
``(A) In general.--No Medicare+Choice organization
may operate any physician incentive plan (as defined in
subparagraph (B)) unless the following requirements are
met:
``(i) No specific payment is made directly or
indirectly under the plan to a physician or
physician group as an inducement to reduce or
limit medically necessary services provided with
respect to a specific individual enrolled with the
organization.
``(ii) If the plan places a physician or
physician group at substantial financial risk (as
determined by the Secretary) for services not
provided by the physician or physician group, the
organization--
``(I) provides stop-loss protection
for the physician or group that is
adequate and appropriate, based on
standards developed by the Secretary
that take into account the number of
physicians placed at such substantial
financial risk in the group or under the
plan and the number of individuals
enrolled with the organization who
receive services from the physician or
group, and
``(II) conducts periodic surveys of
both individuals enrolled and
individuals previously enrolled with the
organization to determine the degree of
access of such individuals to services
provided by the organization and
satisfaction with the quality of such
services.
``(iii) The organization provides the
Secretary with descriptive information regarding
the plan, sufficient to permit the Secretary to
determine whether the plan is in compliance with
the requirements of this subparagraph.
``(B) Physician incentive plan defined.--In this
paragraph, the term `physician incentive plan' means any
[[Page 111 STAT. 297]]
compensation arrangement between a Medicare+Choice
organization and a physician or physician group that may
directly or indirectly have the effect of reducing or
limiting services provided with respect to individuals
enrolled with the organization under this part.
``(5) Limitation on provider indemnification.--A
Medicare+Choice organization may not provide (directly or
indirectly) for a health care professional, provider of
services, or other entity providing health care services (or
group of such professionals, providers, or entities) to
indemnify the organization against any liability resulting from
a civil action brought for any damage caused to an enrollee with
a Medicare+Choice plan of the organization under this part by
the organization's denial of medically necessary care.
``(6) Special rules for medicare+choice private fee-for-
service plans.--For purposes of applying this part (including
subsection (k)(1)) and section 1866(a)(1)(O), a hospital (or
other provider of services), a physician or other health care
professional, or other entity furnishing health care services is
treated as having an agreement or contract in effect with a
Medicare+Choice organization (with respect to an individual
enrolled in a Medicare+Choice private fee-for-service plan it
offers), if--
``(A) the provider, professional, or other entity
furnishes services that are covered under the plan to
such an enrollee; and
``(B) before providing such services, the provider,
professional, or other entity --
``(i) has been informed of the individual's
enrollment under the plan, and
``(ii) either--
``(I) has been informed of the terms
and conditions of payment for such
services under the plan, or
``(II) is given a reasonable
opportunity to obtain information
concerning such terms and conditions,
in a manner reasonably designed to effect informed
agreement by a provider.
The previous sentence shall only apply in the absence of an
explicit agreement between such a provider, professional, or
other entity and the Medicare+Choice organization.
``(k) Treatment of Services Furnished by Certain Providers.--
``(1) In general.--Except as provided in paragraph (2), a
physician or other entity (other than a provider of services)
that does not have a contract establishing payment amounts for
services furnished to an individual enrolled under this part
with a Medicare+Choice organization described in section
1851(a)(2)(A) shall accept as payment in full for covered
services under this title that are furnished to such an
individual the amounts that the physician or other entity could
collect if the individual were not so enrolled. Any penalty or
other provision of law that applies to such a payment with
respect to an individual entitled to benefits under this title
(but not enrolled with a Medicare+Choice organization under this
part) also applies with respect to an individual so enrolled.
[[Page 111 STAT. 298]]
``(2) Application to medicare+choice private fee-for-service
plans.--
``(A) Balance billing limits under medicare+choice
private fee-for-service plans in case of contract
providers.--
``(i) In general.--In the case of an
individual enrolled in a Medicare+Choice private
fee-for-service plan under this part, a physician,
provider of services, or other entity that has a
contract (including through the operation of
subsection (j)(6)) establishing a payment rate for
services furnished to the enrollee shall accept as
payment in full for covered services under this
title that are furnished to such an individual an
amount not to exceed (including any deductibles,
coinsurance, copayments, or balance billing
otherwise permitted under the plan) an amount
equal to 115 percent of such payment rate.
``(ii) Procedures to enforce limits.--The
Medicare+Choice organization that offers such a
plan shall establish procedures, similar to the
procedures described in section 1848(g)(1)(A), in
order to carry out the previous sentence.
``(iii) Assuring enforcement.--If the
Medicare+Choice organization fails to establish
and enforce procedures required under clause (ii),
the organization is subject to intermediate
sanctions under section 1857(g).
``(B) Enrollee liability for noncontract
providers.--For provision--
``(i) establishing minimum payment rate in the
case of noncontract providers under a
Medicare+Choice private fee-for-service plan, see
section 1852(a)(2); or
``(ii) limiting enrollee liability in the case
of covered services furnished by such providers,
see paragraph (1) and section 1866(a)(1)(O).
``(C) Information on beneficiary liability.--
``(i) In general.--Each Medicare+Choice
organization that offers a Medicare+Choice private
fee-for-service plan shall provide that enrollees
under the plan who are furnished services for
which payment is sought under the plan are
provided an appropriate explanation of benefits
(consistent with that provided under parts A and B
and, if applicable, under medicare supplemental
policies) that includes a clear statement of the
amount of the enrollee's liability (including any
liability for balance billing consistent with this
subsection) with respect to payments for such
services.
``(ii) Advance notice before receipt of
inpatient hospital services and certain other
services.--In addition, such organization shall,
in its terms and conditions of payments to
hospitals for inpatient hospital services and for
other services identified by the Secretary for
which the amount of the balancing billing under
subparagraph (A) could be substantial, require the
hospital to provide to the enrollee, before
furnishing such services and if the
[[Page 111 STAT. 299]]
hospital imposes balance billing under
subparagraph (A)--
``(I) notice of the fact that
balance billing is permitted under such
subparagraph for such services, and
``(II) a good faith estimate of the
likely amount of such balance billing
(if any), with respect to such services,
based upon the presenting condition of
the enrollee.
``payments to medicare+choice organizations
``Sec. 1853. (a) Payments <<NOTE: 42 USC 1395w-23.>> to
Organizations.--
``(1) Monthly payments.--
``(A) In general.--Under a contract under section
1857 and subject to subsections (e) and (f) and section
1859(e)(4), the Secretary shall make monthly payments
under this section in advance to each Medicare+Choice
organization, with respect to coverage of an individual
under this part in a Medicare+Choice payment area for a
month, in an amount equal to \1/12\ of the annual
Medicare+Choice capitation rate (as calculated under
subsection (c)) with respect to that individual for that
area, adjusted for such risk factors as age, disability
status, gender, institutional status, and such other
factors as the Secretary determines to be appropriate,
so as to ensure actuarial equivalence. The Secretary may
add to, modify, or substitute for such factors, if such
changes will improve the determination of actuarial
equivalence.
``(B) Special rule for end-stage renal disease.--The
Secretary shall establish separate rates of payment to a
Medicare+Choice organization with respect to classes of
individuals determined to have end-stage renal disease
and enrolled in a Medicare+Choice plan of the
organization. Such rates of payment shall be actuarially
equivalent to rates paid to other enrollees in the
Medicare+Choice payment area (or such other area as
specified by the Secretary). In accordance with
regulations, the Secretary shall provide for the
application of the seventh sentence of section
1881(b)(7) to payments under this section covering the
provision of renal dialysis treatment in the same manner
as such sentence applies to composite rate payments
described in such sentence.
``(2) Adjustment to reflect number of enrollees.--
``(A) In general.--The amount of payment under this
subsection may be retroactively adjusted to take into
account any difference between the actual number of
individuals enrolled with an organization under this
part and the number of such individuals estimated to be
so enrolled in determining the amount of the advance
payment.
``(B) Special rule for certain enrollees.--
``(i) In general.--Subject to clause (ii), the
Secretary may make retroactive adjustments under
subparagraph (A) to take into account individuals
enrolled during the period beginning on the date
on which the individual enrolls with a
Medicare+Choice organization under a plan
operated, sponsored, or
[[Page 111 STAT. 300]]
contributed to by the individual's employer or
former employer (or the employer or former
employer of the individual's spouse) and ending on
the date on which the individual is enrolled in
the organization under this part, except that for
purposes of making such retroactive adjustments
under this subparagraph, such period may not
exceed 90 days.
``(ii) Exception.--No adjustment may be made
under clause (i) with respect to any individual
who does not certify that the organization
provided the individual with the disclosure
statement described in section 1852(c) at the time
the individual enrolled with the organization.
``(3) Establishment of risk adjustment factors.--
``(A) Report.--The Secretary shall develop, and
submit to Congress by not later than March 1, 1999, a
report on the method of risk adjustment of payment rates
under this section, to be implemented under subparagraph
(C), that accounts for variations in per capita costs
based on health status. Such report shall include an
evaluation of such method by an outside, independent
actuary of the actuarial soundness of the proposal.
``(B) Data collection.--In order to carry out this
paragraph, the Secretary shall require Medicare+Choice
organizations (and eligible organizations with risk-
sharing contracts under section 1876) to submit data
regarding inpatient hospital services for periods
beginning on or after July 1, 1997, and data regarding
other services and other information as the Secretary
deems necessary for periods beginning on or after July
1, 1998. The Secretary may not require an organization
to submit such data before January 1, 1998.
``(C) Initial implementation.--The Secretary shall
first provide for implementation of a risk adjustment
methodology that accounts for variations in per capita
costs based on health status and other demographic
factors for payments by no later than January 1, 2000.
``(D) Uniform application to all types of plans.--
Subject to section 1859(e)(4), the methodology shall be
applied uniformly without regard to the type of plan.
``(b) Annual Announcement of Payment Rates.--
``(1) Annual announcement.--The Secretary shall annually
determine, and shall announce (in a manner intended to provide
notice to interested parties) not later than March 1 before the
calendar year concerned--
``(A) the annual Medicare+Choice capitation rate for
each Medicare+Choice payment area for the year, and
``(B) the risk and other factors to be used in
adjusting such rates under subsection (a)(1)(A) for
payments for months in that year.
``(2) Advance notice of methodological changes.--At least 45
days before making the announcement under paragraph (1) for a
year, the Secretary shall provide for notice to Medicare+Choice
organizations of proposed changes to be made in the methodology
from the methodology and assumptions used in the previous
announcement and shall provide
[[Page 111 STAT. 301]]
such organizations an opportunity to comment on such proposed
changes.
``(3) Explanation of assumptions.--In each announcement made
under paragraph (1), the Secretary shall include an explanation
of the assumptions and changes in methodology used in the
announcement in sufficient detail so that Medicare+Choice
organizations can compute monthly adjusted Medicare+Choice
capitation rates for individuals in each Medicare+Choice payment
area which is in whole or in part within the service area of
such an organization.
``(c) Calculation of Annual Medicare+Choice Capitation Rates.--
``(1) In general.--For purposes of this part, subject to
paragraphs (6)(C) and (7), each annual Medicare+Choice
capitation rate, for a Medicare+Choice payment area for a
contract year consisting of a calendar year, is equal to the
largest of the amounts specified in the following subparagraph
(A), (B), or (C):
``(A) Blended capitation rate.--The sum of--
``(i) the area-specific percentage (as
specified under paragraph (2) for the year) of the
annual area-specific Medicare+Choice capitation
rate for the Medicare+Choice payment area, as
determined under paragraph (3) for the year, and
``(ii) the national percentage (as specified
under paragraph (2) for the year) of the input-
price-adjusted annual national Medicare+Choice
capitation rate, as determined under paragraph (4)
for the year,
multiplied by the budget neutrality adjustment factor
determined under paragraph (5).
``(B) Minimum amount.--12 multiplied by the
following amount:
``(i) For 1998, $367 (but not to exceed, in
the case of an area outside the 50 States and the
District of Columbia, 150 percent of the annual
per capita rate of payment for 1997 determined
under section 1876(a)(1)(C) for the area).
``(ii) For a succeeding year, the minimum
amount specified in this clause (or clause (i))
for the preceding year increased by the national
per capita Medicare+Choice growth percentage,
described in paragraph (6)(A) for that succeeding
year.
``(C) Minimum percentage increase.--
``(i) For 1998, 102 percent of the annual per
capita rate of payment for 1997 determined under
section 1876(a)(1)(C) for the Medicare+Choice
payment area.
``(ii) For a subsequent year, 102 percent of
the annual Medicare+Choice capitation rate under
this paragraph for the area for the previous year.
``(2) Area-specific and national percentages.--For purposes
of paragraph (1)(A)--
``(A) for 1998, the `area-specific percentage' is 90
percent and the `national percentage' is 10 percent,
``(B) for 1999, the `area-specific percentage' is 82
percent and the `national percentage' is 18 percent,
``(C) for 2000, the `area-specific percentage' is 74
percent and the `national percentage' is 26 percent,
[[Page 111 STAT. 302]]
``(D) for 2001, the `area-specific percentage' is 66
percent and the `national percentage' is 34 percent,
``(E) for 2002, the `area-specific percentage' is 58
percent and the `national percentage' is 42 percent, and
``(F) for a year after 2002, the `area-specific
percentage' is 50 percent and the `national percentage'
is 50 percent.
``(3) Annual area-specific medicare+choice capitation
rate.--
``(A) In general.--For purposes of paragraph (1)(A),
subject to subparagraph (B), the annual area-specific
Medicare+Choice capitation rate for a Medicare+Choice
payment area--
``(i) for 1998 is, subject to subparagraph
(D), the annual per capita rate of payment for
1997 determined under section 1876(a)(1)(C) for
the area, increased by the national per capita
Medicare+Choice growth percentage for 1998
(described in paragraph (6)(A)); or
``(ii) for a subsequent year is the annual
area-specific Medicare+Choice capitation rate for
the previous year determined under this paragraph
for the area, increased by the national per capita
Medicare+Choice growth percentage for such
subsequent year.
``(B) Removal of medical education from calculation
of adjusted average per capita cost.--
``(i) In general.--In determining the area-
specific Medicare+Choice capitation rate under
subparagraph (A) for a year (beginning with 1998),
the annual per capita rate of payment for 1997
determined under section 1876(a)(1)(C) shall be
adjusted to exclude from the rate the applicable
percent (specified in clause (ii)) of the payment
adjustments described in subparagraph (C).
``(ii) Applicable percent.--For purposes of
clause (i), the applicable percent for--
``(I) 1998 is 20 percent,
``(II) 1999 is 40 percent,
``(III) 2000 is 60 percent,
``(IV) 2001 is 80 percent, and
``(V) a succeeding year is 100
percent.
``(C) Payment adjustment.--
``(i) In general.--Subject to clause (ii), the
payment adjustments described in this subparagraph
are payment adjustments which the Secretary
estimates were payable during 1997--
``(I) for the indirect costs of
medical education under section
1886(d)(5)(B), and
``(II) for direct graduate medical
education costs under section 1886(h).
``(ii) Treatment of payments covered under
state hospital reimbursement system.--To the
extent that the Secretary estimates that an annual
per capita rate of payment for 1997 described in
clause (i) reflects payments to hospitals
reimbursed under section 1814(b)(3), the Secretary
shall estimate a payment adjustment that is
comparable to the payment
[[Page 111 STAT. 303]]
adjustment that would have been made under clause
(i) if the hospitals had not been reimbursed under
such section.
``(D) Treatment of areas with highly variable
payment rates.--In the case of a Medicare+Choice payment
area for which the annual per capita rate of payment
determined under section 1876(a)(1)(C) for 1997 varies
by more than 20 percent from such rate for 1996, for
purposes of this subsection the Secretary may substitute
for such rate for 1997 a rate that is more
representative of the costs of the enrollees in the
area.
``(4) Input-price-adjusted annual national medicare+choice
capitation rate.--
``(A) In general.--For purposes of paragraph (1)(A),
the input-price-adjusted annual national Medicare+Choice
capitation rate for a Medicare+Choice payment area for a
year is equal to the sum, for all the types of medicare
services (as classified by the Secretary), of the
product (for each such type of service) of--
``(i) the national standardized annual
Medicare+Choice capitation rate (determined under
subparagraph (B)) for the year,
``(ii) the proportion of such rate for the
year which is attributable to such type of
services, and
``(iii) an index that reflects (for that year
and that type of services) the relative input
price of such services in the area compared to the
national average input price of such services.
In applying clause (iii), the Secretary may, subject to
subparagraph (C), apply those indices under this title
that are used in applying (or updating) national payment
rates for specific areas and localities.
``(B) National standardized annual medicare+choice
capitation rate.--In subparagraph (A)(i), the `national
standardized annual Medicare+Choice capitation rate' for
a year is equal to--
``(i) the sum (for all Medicare+Choice payment
areas) of the product of--
``(I) the annual area-specific
Medicare+Choice capitation rate for that
year for the area under paragraph (3),
and
``(II) the average number of
medicare beneficiaries residing in that
area in the year, multiplied by the
average of the risk factor weights used
to adjust payments under subsection
(a)(1)(A) for such beneficiaries in such
area; divided by
``(ii) the sum of the products described in
clause (i)(II) for all areas for that year.
``(C) Special rules for 1998.--In applying this
paragraph for 1998--
``(i) medicare services shall be divided into
2 types of services: part A services and part B
services;
``(ii) the proportions described in
subparagraph (A)(ii)--
``(I) for part A services shall be
the ratio (expressed as a percentage) of
the national average annual per capita
rate of payment for part A for
[[Page 111 STAT. 304]]
1997 to the total national average
annual per capita rate of payment for
parts A and B for 1997, and
``(II) for part B services shall be
100 percent minus the ratio described in
subclause (I);
``(iii) for part A services, 70 percent of
payments attributable to such services shall be
adjusted by the index used under section
1886(d)(3)(E) to adjust payment rates for relative
hospital wage levels for hospitals located in the
payment area involved;
``(iv) for part B services--
``(I) 66 percent of payments
attributable to such services shall be
adjusted by the index of the geographic
area factors under section 1848(e) used
to adjust payment rates for physicians'
services furnished in the payment area,
and
``(II) of the remaining 34 percent
of the amount of such payments, 40
percent shall be adjusted by the index
described in clause (iii); and
``(v) the index values shall be computed based
only on the beneficiary population who are 65
years of age or older and who are not determined
to have end stage renal disease.
The Secretary may continue to apply the rules described
in this subparagraph (or similar rules) for 1999.
``(5) Payment adjustment budget neutrality factor.--For
purposes of paragraph (1)(A), for each year, the Secretary shall
determine a budget neutrality adjustment factor so that the
aggregate of the payments under this part shall equal the
aggregate payments that would have been made under this part if
payment were based entirely on area-specific capitation rates.
``(6) National per capita medicare+choice growth percentage
defined.--
``(A) In general.--In this part, the `national per
capita Medicare+Choice growth percentage' for a year is
the percentage determined by the Secretary, by March 1st
before the beginning of the year involved, to reflect
the Secretary's estimate of the projected per capita
rate of growth in expenditures under this title for an
individual entitled to benefits under part A and
enrolled under part B, reduced by the number of
percentage points specified in subparagraph (B) for the
year. Separate determinations may be made for aged
enrollees, disabled enrollees, and enrollees with end-
stage renal disease.
``(B) Adjustment.--The number of percentage points
specified in this subparagraph is--
``(i) for 1998, 0.8 percentage points,
``(ii) for 1999, 0.5 percentage points,
``(iii) for 2000, 0.5 percentage points,
``(iv) for 2001, 0.5 percentage points,
``(v) for 2002, 0.5 percentage points, and
``(vi) for a year after 2002, 0 percentage
points.
``(C) Adjustment for over or under projection of
national per capita medicare+choice growth percentage.--
Beginning with rates calculated for 1999, before
computing rates for a year as described in paragraph
(1),
[[Page 111 STAT. 305]]
the Secretary shall adjust all area-specific and
national Medicare+Choice capitation rates (and beginning
in 2000, the minimum amount) for the previous year for
the differences between the projections of the national
per capita Medicare+Choice growth percentage for that
year and previous years and the current estimate of such
percentage for such years.
``(7) Adjustment for national coverage determinations.--If
the Secretary makes a determination with respect to coverage
under this title that the Secretary projects will result in a
significant increase in the costs to Medicare+Choice of
providing benefits under contracts under this part (for periods
after any period described in section 1852(a)(5)), the Secretary
shall adjust appropriately the payments to such organizations
under this part.
``(d) Medicare+Choice Payment Area Defined.--
``(1) In general.--In this part, except as provided in
paragraph (3), the term `Medicare+Choice payment area' means a
county, or equivalent area specified by the Secretary.
``(2) Rule for esrd beneficiaries.--In the case of
individuals who are determined to have end stage renal disease,
the Medicare+Choice payment area shall be a State or such other
payment area as the Secretary specifies.
``(3) Geographic adjustment.--
``(A) In general.--Upon written request of the chief
executive officer of a State for a contract year
(beginning after 1998) made by not later than February 1
of the previous year, the Secretary shall make a
geographic adjustment to a Medicare+Choice payment area
in the State otherwise determined under paragraph (1)--
``(i) to a single statewide Medicare+Choice
payment area,
``(ii) to the metropolitan based system
described in subparagraph (C), or
``(iii) to consolidating into a single
Medicare+Choice payment area noncontiguous
counties (or equivalent areas described in
paragraph (1)) within a State.
Such adjustment shall be effective for payments for
months beginning with January of the year following the
year in which the request is received.
``(B) Budget neutrality adjustment.--In the case of
a State requesting an adjustment under this paragraph,
the Secretary shall initially (and annually thereafter)
adjust the payment rates otherwise established under
this section for Medicare+Choice payment areas in the
State in a manner so that the aggregate of the payments
under this section in the State shall not exceed the
aggregate payments that would have been made under this
section for Medicare+Choice payment areas in the State
in the absence of the adjustment under this paragraph.
``(C) Metropolitan based system.--The metropolitan
based system described in this subparagraph is one in
which--
``(i) all the portions of each metropolitan
statistical area in the State or in the case of a
consolidated metropolitan statistical area, all of
the portions of each primary metropolitan
statistical area within the
[[Page 111 STAT. 306]]
consolidated area within the State, are treated as
a single Medicare+Choice payment area, and
``(ii) all areas in the State that do not fall
within a metropolitan statistical area are treated
as a single Medicare+Choice payment area.
``(D) Areas.--In subparagraph (C), the terms
`metropolitan statistical area', `consolidated
metropolitan statistical area', and `primary
metropolitan statistical area' mean any area designated
as such by the Secretary of Commerce.
``(e) Special Rules for Individuals Electing MSA Plans.--
``(1) In general.--If the amount of the Medicare+Choice
monthly MSA premium (as defined in section 1854(b)(2)(C)) for an
MSA plan for a year is less than \1/12\ of the annual
Medicare+Choice capitation rate applied under this section for
the area and year involved, the Secretary shall deposit an
amount equal to 100 percent of such difference in a
Medicare+Choice MSA established (and, if applicable, designated)
by the individual under paragraph (2).
``(2) Establishment and designation of medicare+choice
medical savings account as requirement for payment of
contribution.--In the case of an individual who has elected
coverage under an MSA plan, no payment shall be made under
paragraph (1) on behalf of an individual for a month unless the
individual--
``(A) has established before the beginning of the
month (or by such other deadline as the Secretary may
specify) a Medicare+Choice MSA (as defined in section
138(b)(2) of the Internal Revenue Code of 1986), and
``(B) if the individual has established more than
one such Medicare+Choice MSA, has designated one of such
accounts as the individual's Medicare+Choice MSA for
purposes of this part.
Under rules under this section, such an individual may change
the designation of such account under subparagraph (B) for
purposes of this part.
``(3) Lump-sum deposit of medical savings account
contribution.--In the case of an individual electing an MSA plan
effective beginning with a month in a year, the amount of the
contribution to the Medicare+Choice MSA on behalf of the
individual for that month and all successive months in the year
shall be deposited during that first month. In the case of a
termination of such an election as of a month before the end of
a year, the Secretary shall provide for a procedure for the
recovery of deposits attributable to the remaining months in the
year.
``(f) Payments From Trust Fund.--The payment to a Medicare+Choice
organization under this section for individuals enrolled under this part
with the organization and payments to a Medicare+Choice MSA under
subsection (e)(1) shall be made from the Federal Hospital Insurance
Trust Fund and the Federal Supplementary Medical Insurance Trust Fund in
such proportion as the Secretary determines reflects the relative weight
that benefits under part A and under part B represents of the actuarial
value of the total benefits under this title. Monthly payments otherwise
payable under this section for October 2000 shall be paid on the first
business day of such month. Monthly payments otherwise payable under
this section for October 2001 shall be paid on the
[[Page 111 STAT. 307]]
last business day of September 2001. Monthly payments otherwise payable
under this section for October 2006 shall be paid on the first business
day of October 2006.
``(g) Special Rule for Certain Inpatient Hospital Stays.--In the
case of an individual who is receiving inpatient hospital services from
a subsection (d) hospital (as defined in section 1886(d)(1)(B)) as of
the effective date of the individual's--
``(1) election under this part of a Medicare+Choice plan
offered by a Medicare+Choice organization--
``(A) payment for such services until the date of
the individual's discharge shall be made under this
title through the Medicare+Choice plan or the original
medicare fee-for-service program option described in
section 1851(a)(1)(A) (as the case may be) elected
before the election with such organization,
``(B) the elected organization shall not be
financially responsible for payment for such services
until the date after the date of the individual's
discharge, and
``(C) the organization shall nonetheless be paid the
full amount otherwise payable to the organization under
this part; or
``(2) termination of election with respect to a
Medicare+Choice organization under this part--
``(A) the organization shall be financially
responsible for payment for such services after such
date and until the date of the individual's discharge,
``(B) payment for such services during the stay
shall not be made under section 1886(d) or by any
succeeding Medicare+Choice organization, and
``(C) the terminated organization shall not receive
any payment with respect to the individual under this
part during the period the individual is not enrolled.
``(h) Special Rule for Hospice Care.--
``(1) Information.--A contract under this part shall require
the Medicare+Choice organization to inform each individual
enrolled under this part with a Medicare+Choice plan offered by
the organization about the availability of hospice care if--
``(A) a hospice program participating under this
title is located within the organization's service area;
or
``(B) it is common practice to refer patients to
hospice programs outside such service area.
``(2) Payment.--If an individual who is enrolled with a
Medicare+Choice organization under this part makes an election
under section 1812(d)(1) to receive hospice care from a
particular hospice program--
``(A) payment for the hospice care furnished to the
individual shall be made to the hospice program elected
by the individual by the Secretary;
``(B) payment for other services for which the
individual is eligible notwithstanding the individual's
election of hospice care under section 1812(d)(1),
including services not related to the individual's
terminal illness, shall be made by the Secretary to the
Medicare+Choice organization or the provider or supplier
of the service instead of payments calculated under
subsection (a); and
``(C) the Secretary shall continue to make monthly
payments to the Medicare+Choice organization in an
[[Page 111 STAT. 308]]
amount equal to the value of the additional benefits
required under section 1854(f)(1)(A).
``premiums
``Sec. 1854. (a) Submission <<NOTE: 42 USC 1395w-24.>> of Proposed
Premiums and Related Information.--
(1) In general.--Not later than May 1 of each year, each
Medicare+Choice organization shall submit to the Secretary, in a
form and manner specified by the Secretary and for each
Medicare+Choice plan for the service area in which it intends to
be offered in the following year--
``(A) the information described in paragraph (2),
(3), or (4) for the type of plan involved; and
``(B) the enrollment capacity (if any) in relation
to the plan and area.
``(2) Information required for coordinated care plans.--For
a Medicare+Choice plan described in section 1851(a)(2)(A), the
information described in this paragraph is as follows:
``(A) Basic (and additional) benefits.--For benefits
described in 1852(a)(1)(A)--
``(i) the adjusted community rate (as defined
in subsection (f)(3));
``(ii) the Medicare+Choice monthly basic
beneficiary premium (as defined in subsection
(b)(2)(A));
``(iii) a description of deductibles,
coinsurance, and copayments applicable under the
plan and the actuarial value of such deductibles,
coinsurance, and copayments, described in
subsection (e)(1)(A); and
``(iv) if required under subsection (f)(1), a
description of the additional benefits to be
provided pursuant to such subsection and the value
determined for such proposed benefits under such
subsection.
``(B) Supplemental benefits.--For benefits described
in 1852(a)(3)--
``(i) the adjusted community rate (as defined
in subsection (f)(3));
``(ii) the Medicare+Choice monthly
supplemental beneficiary premium (as defined in
subsection (b)(2)(B)); and
``(iii) a description of deductibles,
coinsurance, and copayments applicable under the
plan and the actuarial value of such deductibles,
coinsurance, and copayments, described in
subsection (e)(2).
``(3) Requirements for msa plans.--For an MSA plan
described, the information described in this paragraph is as
follows:
``(A) Basic (and additional) benefits.--For benefits
described in 1852(a)(1)(A), the amount of the
Medicare+Choice monthly MSA premium.
``(B) Supplemental benefits.--For benefits described
in 1852(a)(3), the amount of the Medicare+Choice monthly
supplementary beneficiary premium.
``(4) Requirements for private fee-for-service plans.--For a
Medicare+Choice plan described in section 1851(a)(2)(C) for
benefits described in 1852(a)(1)(A), the information described
in this paragraph is as follows:
[[Page 111 STAT. 309]]
``(A) Basic (and additional) benefits.--For benefits
described in 1852(a)(1)(A)--
``(i) the adjusted community rate (as defined
in subsection (f)(3));
``(ii) the amount of the Medicare+Choice
monthly basic beneficiary premium;
``(iii) a description of the deductibles,
coinsurance, and copayments applicable under the
plan, and the actuarial value of such deductibles,
coinsurance, and copayments, as described in
subsection (e)(4)(A); and
``(iv) if required under subsection (f)(1), a
description of the additional benefits to be
provided pursuant to such subsection and the value
determined for such proposed benefits under such
subsection.
``(B) Supplemental benefits.--For benefits described
in 1852(a)(3), the amount of the Medicare+Choice monthly
supplemental beneficiary premium (as defined in
subsection (b)(2)(B)).
``(5) Review.--
``(A) In general.--Subject to subparagraph (B), the
Secretary shall review the adjusted community rates, the
amounts of the basic and supplemental premiums, and
values filed under this subsection and shall approve or
disapprove such rates, amounts, and value so submitted.
``(B) Exception.--The Secretary shall not review,
approve, or disapprove the amounts submitted under
paragraph (3) or subparagraphs (A)(ii) and (B) of
paragraph (4).
``(b) Monthly Premium Charged.--
``(1) In general.--
``(A) Rule for other than msa plans.--The monthly
amount of the premium charged to an individual enrolled
in a Medicare+Choice plan (other than an MSA plan)
offered by a Medicare+Choice organization shall be equal
to the sum of the Medicare+Choice monthly basic
beneficiary premium and the Medicare+Choice monthly
supplementary beneficiary premium (if any).
``(B) MSA plans.--The monthly amount of the premium
charged to an individual enrolled in an MSA plan offered
by a Medicare+Choice organization shall be equal to the
Medicare+Choice monthly supplemental beneficiary premium
(if any).
``(2) Premium terminology defined.--For purposes of this
part:
``(A) The Medicare+Choice monthly basic beneficiary
premium.--The term `Medicare+Choice monthly basic
beneficiary premium' means, with respect to a
Medicare+Choice plan, the amount authorized to be
charged under subsection (e)(1) for the plan, or, in the
case of a Medicare+Choice private fee-for-service plan,
the amount filed under subsection (a)(4)(A)(ii).
``(B) Medicare+Choice monthly supplemental
beneficiary premium.--The term `Medicare+Choice monthly
supplemental beneficiary premium' means, with respect to
a Medicare+Choice plan, the amount authorized to be
charged under subsection (e)(2) for the plan or, in the
case of a MSA plan or Medicare+Choice private fee-for-
[[Page 111 STAT. 310]]
service plan, the amount filed under paragraph (3)(B) or
(4)(B) of subsection (a).
``(C) Medicare+Choice monthly MSA premium.--The term
`Medicare+Choice monthly MSA premium' means, with
respect to a Medicare+Choice plan, the amount of such
premium filed under subsection (a)(3)(A) for the plan.
``(c) Uniform Premium.--The Medicare+Choice monthly basic and
supplemental beneficiary premium, the Medicare+Choice monthly MSA
premium charged under subsection (b) of a Medicare+Choice organization
under this part may not vary among individuals enrolled in the plan.
``(d) Terms and Conditions of Imposing Premiums.--Each
Medicare+Choice organization shall permit the payment of Medicare+Choice
monthly basic and supplemental beneficiary premiums on a monthly basis,
may terminate election of individuals for a Medicare+Choice plan for
failure to make premium payments only in accordance with section
1851(g)(3)(B)(i), and may not provide for cash or other monetary rebates
as an inducement for enrollment or otherwise.
``(e) Limitation on Enrollee Liability.--
``(1) For basic and additional benefits.--In no event may--
``(A) the Medicare+Choice monthly basic beneficiary
premium (multiplied by 12) and the actuarial value of
the deductibles, coinsurance, and copayments applicable
on average to individuals enrolled under this part with
a Medicare+Choice plan described in section
1851(a)(2)(A) of an organization with respect to
required benefits described in section 1852(a)(1)(A) and
additional benefits (if any) required under subsection
(f)(1)(A) for a year, exceed
``(B) the actuarial value of the deductibles,
coinsurance, and copayments that would be applicable on
average to individuals entitled to benefits under part A
and enrolled under part B if they were not members of a
Medicare+Choice organization for the year.
``(2) For supplemental benefits.--If the Medicare+Choice
organization provides to its members enrolled under this part in
a Medicare+Choice plan described in section 1851(a)(2)(A) with
respect to supplemental benefits described in section
1852(a)(3), the sum of the Medicare+Choice monthly supplemental
beneficiary premium (multiplied by 12) charged and the actuarial
value of its deductibles, coinsurance, and copayments charged
with respect to such benefits may not exceed the adjusted
community rate for such benefits (as defined in subsection
(f)(3)).
``(3) Determination on other basis.--If the Secretary
determines that adequate data are not available to determine the
actuarial value under paragraph (1)(A) or (2), the Secretary may
determine such amount with respect to all individuals in same
geographic area, the State, or in the United States, eligible to
enroll in the Medicare+Choice plan involved under this part or
on the basis of other appropriate data.
``(4) Special rule for private fee-for-service plans.--With
respect to a Medicare+Choice private fee-for-service plan (other
than a plan that is an MSA plan), in no event may--
[[Page 111 STAT. 311]]
``(A) the actuarial value of the deductibles,
coinsurance, and copayments applicable on average to
individuals enrolled under this part with such a plan of
an organization with respect to required benefits
described in section 1852(a)(1), exceed
``(B) the actuarial value of the deductibles,
coinsurance, and copayments that would be applicable on
average to individuals entitled to benefits under part A
and enrolled under part B if they were not members of a
Medicare+Choice organization for the year.
``(f) Requirement for Additional Benefits.--
``(1) Requirement.--
``(A) In general.--Each Medicare+Choice organization
(in relation to a Medicare+Choice plan, other than an
MSA plan, it offers) shall provide that if there is an
excess amount (as defined in subparagraph (B)) for the
plan for a contract year, subject to the succeeding
provisions of this subsection, the organization shall
provide to individuals such additional benefits (as the
organization may specify) in a value which the Secretary
determines is at least equal to the adjusted excess
amount (as defined in subparagraph (C)).
``(B) Excess amount.--For purposes of this
paragraph, the `excess amount', for an organization for
a plan, is the amount (if any) by which--
``(i) the average of the capitation payments
made to the organization under section 1853 for
the plan at the beginning of contract year,
exceeds
``(ii) the actuarial value of the required
benefits described in section 1852(a)(1)(A) under
the plan for individuals under this part, as
determined based upon an adjusted community rate
described in paragraph (3) (as reduced for the
actuarial value of the coinsurance, copayments,
and deductibles under parts A and B).
``(C) Adjusted excess amount.--For purposes of this
paragraph, the `adjusted excess amount', for an
organization for a plan, is the excess amount reduced to
reflect any amount withheld and reserved for the
organization for the year under paragraph (2).
``(D) Uniform application.--This paragraph shall be
applied uniformly for all enrollees for a plan.
``(E) Construction.--Nothing in this subsection
shall be construed as preventing a Medicare+Choice
organization from providing supplemental benefits
(described in section 1852(a)(3)) that are in addition
to the health care benefits otherwise required to be
provided under this paragraph and from imposing a
premium for such supplemental benefits.
``(2) Stabilization fund.--A Medicare+Choice organization
may provide that a part of the value of an excess amount
described in paragraph (1) be withheld and reserved in the
Federal Hospital Insurance Trust Fund and in the Federal
Supplementary Medical Insurance Trust Fund (in such proportions
as the Secretary determines to be appropriate) by the Secretary
for subsequent annual contract periods, to the extent required
to stabilize and prevent undue fluctuations in the
[[Page 111 STAT. 312]]
additional benefits offered in those subsequent periods by the
organization in accordance with such paragraph. Any of such
value of the amount reserved which is not provided as additional
benefits described in paragraph (1)(A) to individuals electing
the Medicare+Choice plan of the organization in accordance with
such paragraph prior to the end of such periods, shall revert
for the use of such trust funds.
``(3) Adjusted community rate.--For purposes of this
subsection, subject to paragraph (4), the term `adjusted
community rate' for a service or services means, at the election
of a Medicare+Choice organization, either--
``(A) the rate of payment for that service or
services which the Secretary annually determines would
apply to an individual electing a Medicare+Choice plan
under this part if the rate of payment were determined
under a `community rating system' (as defined in section
1302(8) of the Public Health Service Act, other than
subparagraph (C)), or
``(B) such portion of the weighted aggregate
premium, which the Secretary annually estimates would
apply to such an individual, as the Secretary annually
estimates is attributable to that service or services,
but adjusted for differences between the utilization
characteristics of the individuals electing coverage under this
part and the utilization characteristics of the other enrollees
with the plan (or, if the Secretary finds that adequate data are
not available to adjust for those differences, the differences
between the utilization characteristics of individuals selecting
other Medicare+Choice coverage, or Medicare+Choice eligible
individuals in the area, in the State, or in the United States,
eligible to elect Medicare+Choice coverage under this part and
the utilization characteristics of the rest of the population in
the area, in the State, or in the United States, respectively).
``(4) Determination based on insufficient data.--For
purposes of this subsection, if the Secretary finds that there
is insufficient enrollment experience to determine an average of
the capitation payments to be made under this part at the
beginning of a contract period or to determine (in the case of a
newly operated provider-sponsored organization or other new
organization) the adjusted community rate for the organization,
the Secretary may determine such an average based on the
enrollment experience of other contracts entered into under this
part and may determine such a rate using data in the general
commercial marketplace.
``(g) Prohibition of State Imposition of Premium Taxes.--No State
may impose a premium tax or similar tax with respect to payments to
Medicare+Choice organizations under section 1853.
``organizational and financial requirements for medicare+choice
organizations; provider-sponsored organizations
``Sec. 1855. (a) Organized <<NOTE: 42 USC 1395w-25.>> and Licensed
Under State Law.--
``(1) In general.--Subject to paragraphs (2) and (3), a
Medicare+Choice organization shall be organized and licensed
under State law as a risk-bearing entity eligible to offer
health insurance or health benefits coverage in each State in
which it offers a Medicare+Choice plan.
[[Page 111 STAT. 313]]
``(2) Special exception for provider-sponsored
organizations.--
``(A) In general.--In the case of a provider-
sponsored organization that seeks to offer a
Medicare+Choice plan in a State, the Secretary shall
waive the requirement of paragraph (1) that the
organization be licensed in that State if--
``(i) the organization files an application
for such waiver with the Secretary by not later
than November 1, 2002, and
``(ii) the Secretary determines, based on the
application and other evidence presented to the
Secretary, that any of the grounds for approval of
the application described in subparagraph (B),
(C), or (D) has been met.
``(B) Failure to act on licensure application on a
timely basis.--The ground for approval of such a waiver
application described in this subparagraph is that the
State has failed to complete action on a licensing
application of the organization within 90 days of the
date of the State's receipt of a substantially complete
application. No period before the date of the enactment
of this section shall be included in determining such
90-day period.
``(C) Denial of application based on discriminatory
treatment.--The ground for approval of such a waiver
application described in this subparagraph is that the
State has denied such a licensing application and--
``(i) the standards or review process imposed
by the State as a condition of approval of the
license imposes any material requirements,
procedures, or standards (other than solvency
requirements) to such organizations that are not
generally applicable to other entities engaged in
a substantially similar business, or
``(ii) the State requires the organization, as
a condition of licensure, to offer any product or
plan other than a Medicare+Choice plan.
``(D) Denial of application based on application of
solvency requirements.--With respect to waiver
applications filed on or after the date of publication
of solvency standards under section 1856(a), the ground
for approval of such a waiver application described in
this subparagraph is that the State has denied such a
licensing application based (in whole or in part) on the
organization's failure to meet applicable solvency
requirements and--
``(i) such requirements are not the same as
the solvency standards established under section
1856(a); or
``(ii) the State has imposed as a condition of
approval of the license documentation or
information requirements relating to solvency or
other material requirements, procedures, or
standards relating to solvency that are different
from the requirements, procedures, and standards
applied by the Secretary under subsection (d)(2).
For purposes of this paragraph, the term `solvency
requirements' means requirements relating to solvency
and other
[[Page 111 STAT. 314]]
matters covered under the standards established under
section 1856(a).
``(E) Treatment of waiver.--In the case of a waiver
granted under this paragraph for a provider-sponsored
organization with respect to a State--
``(i) Limitation to state.--The waiver shall
be effective only with respect to that State and
does not apply to any other State.
``(ii) Limitation to 36-month period.--The
waiver shall be effective only for a 36-month
period and may not be renewed.
``(iii) Conditioned on compliance with
consumer protection and quality standards.--The
continuation of the waiver is conditioned upon the
organization's compliance with the requirements
described in subparagraph (G).
``(iv) Preemption of state law.--Any
provisions of law of that State which relate to
the licensing of the organization and which
prohibit the organization from providing coverage
pursuant to a contract under this part shall be
superseded.
``(F) Prompt action on application.--The Secretary
shall grant or deny such a waiver application within 60
days after the date the Secretary determines that a
substantially complete waiver application has been
filed. Nothing in this section shall be construed as
preventing an organization which has had such a waiver
application denied from submitting a subsequent waiver
application.
``(G) Application and enforcement of state consumer
protection and quality standards.--
``(i) In general.--A waiver granted under this
paragraph to an organization with respect to
licensing under State law is conditioned upon the
organization's compliance with all consumer
protection and quality standards insofar as such
standards--
``(I) would apply in the State to
the organization if it were licensed
under State law;
``(II) are generally applicable to
other Medicare+Choice organizations and
plans in the State; and
``(III) are consistent with the
standards established under this part.
Such standards shall not include any standard
preempted under section 1856(b)(3)(B).
``(ii) Incorporation into contract.--In the
case of such a waiver granted to an organization
with respect to a State, the Secretary shall
incorporate the requirement that the organization
(and Medicare+Choice plans it offers) comply with
standards under clause (i) as part of the contract
between the Secretary and the organization under
section 1857.
``(iii) Enforcement.--In the case of such a
waiver granted to an organization with respect to
a State, the Secretary may enter into an agreement
with the State under which the State agrees to
provide for monitoring and enforcement activities
with respect to compliance of such an organization
and its
[[Page 111 STAT. 315]]
Medicare+Choice plans with such standards. Such
monitoring and enforcement shall be conducted by
the State in the same manner as the State enforces
such standards with respect to other
Medicare+Choice organizations and plans, without
discrimination based on the type of organization
to which the standards apply. Such an agreement
shall specify or establish mechanisms by which
compliance activities are undertaken, while not
lengthening the time required to review and
process applications for waivers under this
paragraph.
``(H) Report.--By not later than December 31, 2001,
the Secretary shall submit to the Committee on Ways and
Means and the Committee on Commerce of the House of
Representatives and the Committee on Finance of the
Senate a report regarding whether the waiver process
under this paragraph should be continued after December
31, 2002. In making such recommendation, the Secretary
shall consider, among other factors, the impact of such
process on beneficiaries and on the long-term solvency
of the program under this title.
``(3) Licensure does not substitute for or constitute
certification.--The fact that an organization is licensed in
accordance with paragraph (1) does not deem the organization to
meet other requirements imposed under this part.
``(b) Assumption of Full Financial Risk.--The Medicare+Choice
organization shall assume full financial risk on a prospective basis for
the provision of the health care services for which benefits are
required to be provided under section 1852(a)(1), except that the
organization--
``(1) may obtain insurance or make other arrangements for
the cost of providing to any enrolled member such services the
aggregate value of which exceeds such aggregate level as the
Secretary specifies from time to time,
``(2) may obtain insurance or make other arrangements for
the cost of such services provided to its enrolled members other
than through the organization because medical necessity required
their provision before they could be secured through the
organization,
``(3) may obtain insurance or make other arrangements for
not more than 90 percent of the amount by which its costs for
any of its fiscal years exceed 115 percent of its income for
such fiscal year, and
``(4) may make arrangements with physicians or other health
care professionals, health care institutions, or any combination
of such individuals or institutions to assume all or part of the
financial risk on a prospective basis for the provision of basic
health services by the physicians or other health professionals
or through the institutions.
``(c) Certification of Provision Against Risk of Insolvency for
Unlicensed PSOs.--
``(1) In general.--Each Medicare+Choice organization that is
a provider-sponsored organization, that is not licensed by a
State under subsection (a), and for which a waiver application
has been approved under subsection (a)(2), shall meet standards
established under section 1856(a) relating to the financial
solvency and capital adequacy of the organization.
[[Page 111 STAT. 316]]
``(2) Certification process for solvency standards for
psos.--The Secretary shall establish a process for the receipt
and approval of applications of a provider-sponsored
organization described in paragraph (1) for certification (and
periodic recertification) of the organization as meeting such
solvency standards. Under such process, the Secretary shall act
upon such a certification application not later than 60 days
after the date the application has been received.
``(d) Provider-Sponsored Organization Defined.--
``(1) In general.--In this part, the term `provider-
sponsored organization' means a public or private entity--
``(A) that is established or organized, and
operated, by a health care provider, or group of
affiliated health care providers,
``(B) that provides a substantial proportion (as
defined by the Secretary in accordance with paragraph
(2)) of the health care items and services under the
contract under this part directly through the provider
or affiliated group of providers, and
``(C) with respect to which the affiliated providers
share, directly or indirectly, substantial financial
risk with respect to the provision of such items and
services and have at least a majority financial interest
in the entity.
``(2) Substantial proportion.--In defining what is a
`substantial proportion' for purposes of paragraph (1)(B), the
Secretary--
``(A) shall take into account the need for such an
organization to assume responsibility for providing--
``(i) significantly more than the majority of
the items and services under the contract under
this section through its own affiliated providers;
and
``(ii) most of the remainder of the items and
services under the contract through providers with
which the organization has an agreement to provide
such items and services,
in order to assure financial stability and to address
the practical considerations involved in integrating the
delivery of a wide range of service providers;
``(B) shall take into account the need for such an
organization to provide a limited proportion of the
items and services under the contract through providers
that are neither affiliated with nor have an agreement
with the organization; and
``(C) may allow for variation in the definition of
substantial proportion among such organizations based on
relevant differences among the organizations, such as
their location in an urban or rural area.
``(3) Affiliation.--For purposes of this subsection, a
provider is `affiliated' with another provider if, through
contract, ownership, or otherwise--
``(A) one provider, directly or indirectly,
controls, is controlled by, or is under common control
with the other,
``(B) both providers are part of a controlled group
of corporations under section 1563 of the Internal
Revenue Code of 1986,
[[Page 111 STAT. 317]]
``(C) each provider is a participant in a lawful
combination under which each provider shares substantial
financial risk in connection with the organization's
operations, or
``(D) both providers are part of an affiliated
service group under section 414 of such Code.
``(4) Control.--For purposes of paragraph (3), control is
presumed to exist if one party, directly or indirectly, owns,
controls, or holds the power to vote, or proxies for, not less
than 51 percent of the voting rights or governance rights of
another.
``(5) Health care provider defined.--In this subsection, the
term `health care provider' means--
``(A) any individual who is engaged in the delivery
of health care services in a State and who is required
by State law or regulation to be licensed or certified
by the State to engage in the delivery of such services
in the State, and
``(B) any entity that is engaged in the delivery of
health care services in a State and that, if it is
required by State law or regulation to be licensed or
certified by the State to engage in the delivery of such
services in the State, is so licensed.
``(6) Regulations.--The Secretary shall issue regulations to
carry out this subsection.
``establishment of standards
``Sec. 1856. (a) Establishment <<NOTE: 42 USC 1395w-26.>> of
Solvency Standards for Provider-Sponsored Organizations.--
``(1) Establishment.--
``(A) In general.--The Secretary shall establish, on
an expedited basis and using a negotiated rulemaking
process under subchapter III of chapter 5 of title 5,
United States Code, standards described in section
1855(c)(1) (relating to the financial solvency and
capital adequacy of the organization) that entities must
meet to qualify as provider-sponsored organizations
under this part.
``(B) Factors to consider for solvency standards.--
In establishing solvency standards under subparagraph
(A) for provider-sponsored organizations, the Secretary
shall consult with interested parties and shall take
into account--
``(i) the delivery system assets of such an
organization and ability of such an organization
to provide services directly to enrollees through
affiliated providers,
``(ii) alternative means of protecting against
insolvency, including reinsurance, unrestricted
surplus, letters of credit, guarantees,
organizational insurance coverage, partnerships
with other licensed entities, and valuation
attributable to the ability of such an
organization to meet its service obligations
through direct delivery of care, and
``(iii) any standards developed by the
National Association of Insurance Commissioners
specifically for risk-based health care delivery
organizations.
``(C) Enrollee protection against insolvency.--Such
standards shall include provisions to prevent enrollees
[[Page 111 STAT. 318]]
from being held liable to any person or entity for the
Medicare+Choice organization's debts in the event of the
organization's insolvency.
``(2) Publication of notice.--In carrying out the rulemaking
process under this subsection, the Secretary, after consultation
with the National Association of Insurance Commissioners, the
American Academy of Actuaries, organizations representative of
medicare beneficiaries, and other interested parties, shall
publish the notice provided for under section 564(a) of title 5,
United States Code, by not later than 45 days after the date of
the enactment of this section.
``(3) Target date for publication of rule.--As part of the
notice under paragraph (2), and for purposes of this subsection,
the `target date for publication' (referred to in section
564(a)(5) of such title) shall be April 1, 1998.
``(4) Abbreviated period for submission of comments.--In
applying section 564(c) of such title under this subsection, `15
days' shall be substituted for `30 days'.
``(5) Appointment of negotiated rulemaking committee and
facilitator.--The Secretary shall provide for--
``(A) the appointment of a negotiated rulemaking
committee under section 565(a) of such title by not
later than 30 days after the end of the comment period
provided for under section 564(c) of such title (as
shortened under paragraph (4)), and
``(B) the nomination of a facilitator under section
566(c) of such title by not later than 10 days after the
date of appointment of the committee.
``(6) Preliminary committee report.--The negotiated
rulemaking committee appointed under paragraph (5) shall report
to the Secretary, by not later than January 1, 1998, regarding
the committee's progress on achieving a consensus with regard to
the rulemaking proceeding and whether such consensus is likely
to occur before 1 month before the target date for publication
of the rule. If the committee reports that the committee has
failed to make significant progress towards such consensus or is
unlikely to reach such consensus by the target date, the
Secretary may terminate such process and provide for the
publication of a rule under this subsection through such other
methods as the Secretary may provide.
``(7) Final committee report.--If the committee is not
terminated under paragraph (6), the rulemaking committee shall
submit a report containing a proposed rule by not later than 1
month before the target date of publication.
``(8) Interim, <<NOTE: Federal Register,
publication.>> final effect.--The Secretary shall publish a rule
under this subsection in the Federal Register by not later than
the target date of publication. Such rule shall be effective and
final immediately on an interim basis, but is subject to change
and revision after public notice and opportunity for a period
(of not less than 60 days) for public comment. In connection
with such rule, the Secretary shall specify the process for the
timely review and approval of applications of entities to be
certified as provider-sponsored organizations pursuant to such
rules and consistent with this subsection.
``(9) Publication of rule after public comment.--The
Secretary shall provide for consideration of such comments
[[Page 111 STAT. 319]]
and republication of such rule by not later than 1 year after
the target date of publication.
``(b) Establishment of Other Standards.--
``(1) In general.--The Secretary shall establish by
regulation other standards (not described in subsection (a)) for
Medicare+Choice organizations and plans consistent with, and to
carry out, this part. <<NOTE: Publication.>> The Secretary shall
publish such regulations by June 1, 1998. In order to carry out
this requirement in a timely manner, the Secretary may
promulgate regulations that take effect on an interim basis,
after notice and pending opportunity for public comment.
``(2) Use of current standards.--Consistent with the
requirements of this part, standards established under this
subsection shall be based on standards established under section
1876 to carry out analogous provisions of such section.
``(3) Relation to state laws.--
``(A) In general.--The standards established under
this subsection shall supersede any State law or
regulation (including standards described in
subparagraph (B)) with respect to Medicare+Choice plans
which are offered by Medicare+Choice organizations under
this part to the extent such law or regulation is
inconsistent with such standards.
``(B) Standards specifically superseded.--State
standards relating to the following are superseded under
this paragraph:
``(i) Benefit requirements.
``(ii) Requirements relating to inclusion or
treatment of providers.
``(iii) Coverage determinations (including
related appeals and grievance processes).
``contracts with medicare+choice organizations
``Sec. 1857. (a) In <<NOTE: 42 USC 1395w-27.>> General.--The
Secretary shall not permit the election under section 1851 of a
Medicare+Choice plan offered by a Medicare+Choice organization under
this part, and no payment shall be made under section 1853 to an
organization, unless the Secretary has entered into a contract under
this section with the organization with respect to the offering of such
plan. Such a contract with an organization may cover more than 1
Medicare+Choice plan. Such contract shall provide that the organization
agrees to comply with the applicable requirements and standards of this
part and the terms and conditions of payment as provided for in this
part.
``(b) Minimum Enrollment Requirements.--
``(1) In general.--Subject to paragraph (2), the Secretary
may not enter into a contract under this section with a
Medicare+Choice organization unless the organization has--
``(A) at least 5,000 individuals (or 1,500
individuals in the case of an organization that is a
provider-sponsored organization) who are receiving
health benefits through the organization, or
``(B) at least 1,500 individuals (or 500 individuals
in the case of an organization that is a provider-
sponsored organization) who are receiving health
benefits through the organization if the organization
primarily serves individuals residing outside of
urbanized areas.
[[Page 111 STAT. 320]]
``(2) Application to msa plans.--In applying paragraph (1)
in the case of a Medicare+Choice organization that is offering
an MSA plan, paragraph (1) shall be applied by substituting
covered lives for individuals.
``(3) Allowing transition.--The Secretary may waive the
requirement of paragraph (1) during the first 3 contract years
with respect to an organization.
``(c) Contract Period and Effectiveness.--
``(1) Period.--Each contract under this section shall be for
a term of at least 1 year, as determined by the Secretary, and
may be made automatically renewable from term to term in the
absence of notice by either party of intention to terminate at
the end of the current term.
``(2) Termination authority.--In accordance with procedures
established under subsection (h), the Secretary may at any time
terminate any such contract if the Secretary determines that the
organization--
``(A) has failed substantially to carry out the
contract;
``(B) is carrying out the contract in a manner
inconsistent with the efficient and effective
administration of this part; or
``(C) no longer substantially meets the applicable
conditions of this part.
``(3) Effective date of contracts.--The effective date of
any contract executed pursuant to this section shall be
specified in the contract, except that in no case shall a
contract under this section which provides for coverage under an
MSA plan be effective before January 1999 with respect to such
coverage.
``(4) Previous terminations.--The Secretary may not enter
into a contract with a Medicare+Choice organization if a
previous contract with that organization under this section was
terminated at the request of the organization within the
preceding 5-year period, except in circumstances which warrant
special consideration, as determined by the Secretary.
``(5) Contracting authority.--The authority vested in the
Secretary by this part may be performed without regard to such
provisions of law or regulations relating to the making,
performance, amendment, or modification of contracts of the
United States as the Secretary may determine to be inconsistent
with the furtherance of the purpose of this title.
``(d) Protections Against Fraud and Beneficiary Protections.--
``(1) Periodic auditing.--The Secretary shall provide for
the annual auditing of the financial records (including data
relating to medicare utilization, costs, and computation of the
adjusted community rate) of at least one-third of the
Medicare+Choice organizations offering Medicare+Choice plans
under this part. The Comptroller General shall monitor auditing
activities conducted under this subsection.
``(2) Inspection and audit.--Each contract under this
section shall provide that the Secretary, or any person or
organization designated by the Secretary--
``(A) shall have the right to inspect or otherwise
evaluate (i) the quality, appropriateness, and
timeliness of services performed under the contract, and
(ii) the facilities
[[Page 111 STAT. 321]]
of the organization when there is reasonable evidence of
some need for such inspection, and
``(B) shall have the right to audit and inspect any
books and records of the Medicare+Choice organization
that pertain (i) to the ability of the organization to
bear the risk of potential financial losses, or (ii) to
services performed or determinations of amounts payable
under the contract.
``(3) Enrollee notice at time of termination.--Each contract
under this section shall require the organization to provide
(and pay for) written notice in advance of the contract's
termination, as well as a description of alternatives for
obtaining benefits under this title, to each individual enrolled
with the organization under this part.
``(4) <<NOTE: Reports.>> Disclosure.--
``(A) In general.--Each Medicare+Choice organization
shall, in accordance with regulations of the Secretary,
report to the Secretary financial information which
shall include the following:
``(i) Such information as the Secretary may
require demonstrating that the organization has a
fiscally sound operation.
``(ii) A copy of the report, if any, filed
with the Health Care Financing Administration
containing the information required to be reported
under section 1124 by disclosing entities.
``(iii) A description of transactions, as
specified by the Secretary, between the
organization and a party in interest. Such
transactions shall include--
``(I) any sale or exchange, or
leasing of any property between the
organization and a party in interest;
``(II) any furnishing for
consideration of goods, services
(including management services), or
facilities between the organization and
a party in interest, but not including
salaries paid to employees for services
provided in the normal course of their
employment and health services provided
to members by hospitals and other
providers and by staff, medical group
(or groups), individual practice
association (or associations), or any
combination thereof; and
``(III) any lending of money or
other extension of credit between an
organization and a party in interest.
The Secretary may require that information reported
respecting an organization which controls, is controlled
by, or is under common control with, another entity be
in the form of a consolidated financial statement for
the organization and such entity.
``(B) Party in interest defined.--For the purposes
of this paragraph, the term `party in interest' means--
``(i) any director, officer, partner, or
employee responsible for management or
administration of a Medicare+Choice organization,
any person who is directly or indirectly the
beneficial owner of more than 5 percent of the
equity of the organization, any person
[[Page 111 STAT. 322]]
who is the beneficial owner of a mortgage, deed of
trust, note, or other interest secured by, and
valuing more than 5 percent of the organization,
and, in the case of a Medicare+Choice organization
organized as a nonprofit corporation, an
incorporator or member of such corporation under
applicable State corporation law;
``(ii) any entity in which a person described
in clause (i)--
``(I) is an officer or director;
``(II) is a partner (if such entity
is organized as a partnership);
``(III) has directly or indirectly a
beneficial interest of more than 5
percent of the equity; or
``(IV) has a mortgage, deed of
trust, note, or other interest valuing
more than 5 percent of the assets of
such entity;
``(iii) any person directly or indirectly
controlling, controlled by, or under common
control with an organization; and
``(iv) any spouse, child, or parent of an
individual described in clause (i).
``(C) Access to information.--Each Medicare+Choice
organization shall make the information reported
pursuant to subparagraph (A) available to its enrollees
upon reasonable request.
``(5) Loan information.--The contract shall require the
organization to notify the Secretary of loans and other special
financial arrangements which are made between the organization
and subcontractors, affiliates, and related parties.
``(e) Additional Contract Terms.--
``(1) In general.--The contract shall contain such other
terms and conditions not inconsistent with this part (including
requiring the organization to provide the Secretary with such
information) as the Secretary may find necessary and
appropriate.
``(2) Cost-sharing in enrollment-related costs.--
``(A) In general.--A Medicare+Choice organization
shall pay the fee established by the Secretary under
subparagraph (B).
``(B) Authorization.--The Secretary is authorized to
charge a fee to each Medicare+Choice organization with a
contract under this part that is equal to the
organization's pro rata share (as determined by the
Secretary) of the aggregate amount of fees which the
Secretary is directed to collect in a fiscal year. Any
amounts collected are authorized to be appropriated only
for the purpose of carrying out section 1851 (relating
to enrollment and dissemination of information) and
section 4360 of the Omnibus Budget Reconciliation Act of
1990 (relating to the health insurance counseling and
assistance program).
``(C) Contingency.--For any fiscal year, the fees
authorized under subparagraph (B) are contingent upon
enactment in an appropriations act of a provision
specifying the aggregate amount of fees the Secretary is
directed to collect in a fiscal year. Fees collected
during any fiscal
[[Page 111 STAT. 323]]
year under this paragraph shall be deposited and
credited as offsetting collections.
``(D) Limitation.--In any fiscal year the fees
collected by the Secretary under subparagraph (B) shall
not exceed the lesser of--
``(i) the estimated costs to be incurred by
the Secretary in the fiscal year in carrying out
the activities described in section 1851 and
section 4360 of the Omnibus Budget Reconciliation
Act of 1990; or
``(ii)(I) $200,000,000 in fiscal year 1998;
``(II) $150,000,000 in fiscal year 1999; and
``(III) $100,000,000 in fiscal year 2000 and
each subsequent fiscal year.
``(f) Prompt Payment by Medicare+Choice Organization.--
``(1) Requirement.--A contract under this part shall require
a Medicare+Choice organization to provide prompt payment
(consistent with the provisions of sections 1816(c)(2) and
1842(c)(2)) of claims submitted for services and supplies
furnished to enrollees pursuant to the contract, if the services
or supplies are not furnished under a contract between the
organization and the provider or supplier (or in the case of a
Medicare+Choice private fee-for-service plan, if a claim is
submitted to such organization by an enrollee).
``(2) Secretary's option to bypass noncomplying
organization.--In the case of a Medicare+Choice eligible
organization which the Secretary determines, after notice and
opportunity for a hearing, has failed to make payments of
amounts in compliance with paragraph (1), the Secretary may
provide for direct payment of the amounts owed to providers and
suppliers (or, in the case of a Medicare+Choice private fee-for-
service plan, amounts owed to the enrollees) for covered
services and supplies furnished to individuals enrolled under
this part under the contract. If the Secretary provides for the
direct payments, the Secretary shall provide for an appropriate
reduction in the amount of payments otherwise made to the
organization under this part to reflect the amount of the
Secretary's payments (and the Secretary's costs in making the
payments).
``(g) Intermediate Sanctions.--
``(1) In general.--If the Secretary determines that a
Medicare+Choice organization with a contract under this
section--
``(A) fails substantially to provide medically
necessary items and services that are required (under
law or under the contract) to be provided to an
individual covered under the contract, if the failure
has adversely affected (or has substantial likelihood of
adversely affecting) the individual;
``(B) imposes premiums on individuals enrolled under
this part in excess of the amount of the Medicare+Choice
monthly basic and supplemental beneficiary premiums
permitted under section 1854;
``(C) acts to expel or to refuse to re-enroll an
individual in violation of the provisions of this part;
``(D) engages in any practice that would reasonably
be expected to have the effect of denying or
discouraging enrollment (except as permitted by this
part) by eligible individuals with the organization
whose medical condition
[[Page 111 STAT. 324]]
or history indicates a need for substantial future
medical services;
``(E) misrepresents or falsifies information that is
furnished--
``(i) to the Secretary under this part, or
``(ii) to an individual or to any other entity
under this part;
``(F) fails to comply with the applicable
requirements of section 1852(j)(3) or 1852(k)(2)(A)(ii);
or
``(G) employs or contracts with any individual or
entity that is excluded from participation under this
title under section 1128 or 1128A for the provision of
health care, utilization review, medical social work, or
administrative services or employs or contracts with any
entity for the provision (directly or indirectly)
through such an excluded individual or entity of such
services;
the Secretary may provide, in addition to any other remedies
authorized by law, for any of the remedies described in
paragraph (2).
``(2) Remedies.--The remedies described in this paragraph
are--
``(A) civil money penalties of not more than $25,000
for each determination under paragraph (1) or, with
respect to a determination under subparagraph (D) or
(E)(i) of such paragraph, of not more than $100,000 for
each such determination, plus, with respect to a
determination under paragraph (1)(B), double the excess
amount charged in violation of such paragraph (and the
excess amount charged shall be deducted from the penalty
and returned to the individual concerned), and plus,
with respect to a determination under paragraph (1)(D),
$15,000 for each individual not enrolled as a result of
the practice involved,
``(B) suspension of enrollment of individuals under
this part after the date the Secretary notifies the
organization of a determination under paragraph (1) and
until the Secretary is satisfied that the basis for such
determination has been corrected and is not likely to
recur, or
``(C) suspension of payment to the organization
under this part for individuals enrolled after the date
the Secretary notifies the organization of a
determination under paragraph (1) and until the
Secretary is satisfied that the basis for such
determination has been corrected and is not likely to
recur.
``(3) Other intermediate sanctions.--In the case of a
Medicare+Choice organization for which the Secretary makes a
determination under subsection (c)(2) the basis of which is not
described in paragraph (1), the Secretary may apply the
following intermediate sanctions:
``(A) Civil money penalties of not more than $25,000
for each determination under subsection (c)(2) if the
deficiency that is the basis of the determination has
directly adversely affected (or has the substantial
likelihood of adversely affecting) an individual covered
under the organization's contract.
``(B) Civil money penalties of not more than $10,000
for each week beginning after the initiation of civil
money
[[Page 111 STAT. 325]]
penalty procedures by the Secretary during which the
deficiency that is the basis of a determination under
subsection (c)(2) exists.
``(C) Suspension of enrollment of individuals under
this part after the date the Secretary notifies the
organization of a determination under subsection (c)(2)
and until the Secretary is satisfied that the deficiency
that is the basis for the determination has been
corrected and is not likely to recur.
``(4) Civil <<NOTE: Applicability.>> money penalties.--The
provisions of section 1128A (other than subsections (a) and (b))
shall apply to a civil money penalty under paragraph (2) or (3)
in the same manner as they apply to a civil money penalty or
proceeding under section 1128A(a).
``(h) Procedures for Termination.--
``(1) In general.--The Secretary may terminate a contract
with a Medicare+Choice organization under this section in
accordance with formal investigation and compliance procedures
established by the Secretary under which--
``(A) the Secretary provides the organization with
the reasonable opportunity to develop and implement a
corrective action plan to correct the deficiencies that
were the basis of the Secretary's determination under
subsection (c)(2); and
``(B) the Secretary provides the organization with
reasonable notice and opportunity for hearing (including
the right to appeal an initial decision) before
terminating the contract.
``(2) Exception for imminent and serious risk to health.--
Paragraph (1) shall not apply if the Secretary determines that a
delay in termination, resulting from compliance with the
procedures specified in such paragraph prior to termination,
would pose an imminent and serious risk to the health of
individuals enrolled under this part with the organization.
``definitions; miscellaneous provisions
``Sec. 1859. (a) Definitions <<NOTE: 42 USC 1395w-28.>> Relating to
Medicare+Choice Organizations.--In this part--
``(1) Medicare+choice organization.--The term
`Medicare+Choice organization' means a public or private entity
that is certified under section 1856 as meeting the requirements
and standards of this part for such an organization.
``(2) Provider-sponsored organization.--The term `provider-
sponsored organization' is defined in section 1855(d)(1).
``(b) Definitions Relating to Medicare+Choice Plans.--
``(1) Medicare+choice plan.--The term `Medicare+Choice plan'
means health benefits coverage offered under a policy, contract,
or plan by a Medicare+Choice organization pursuant to and in
accordance with a contract under section 1857.
``(2) Medicare+Choice private fee-for-service plan.--The
term `Medicare+Choice private fee-for-service plan' means a
Medicare+Choice plan that--
``(A) reimburses hospitals, physicians, and other
providers at a rate determined by the plan on a fee-for-
service basis without placing the provider at financial
risk;
``(B) does not vary such rates for such a provider
based on utilization relating to such provider; and
[[Page 111 STAT. 326]]
``(C) does not restrict the selection of providers
among those who are lawfully authorized to provide the
covered services and agree to accept the terms and
conditions of payment established by the plan.
``(3) MSA plan.--
``(A) In general.--The term `MSA plan' means a
Medicare+Choice plan that--
``(i) provides reimbursement for at least the
items and services described in section 1852(a)(1)
in a year but only after the enrollee incurs
countable expenses (as specified under the plan)
equal to the amount of an annual deductible
(described in subparagraph (B));
``(ii) counts as such expenses (for purposes
of such deductible) at least all amounts that
would have been payable under parts A and B, and
that would have been payable by the enrollee as
deductibles, coinsurance, or copayments, if the
enrollee had elected to receive benefits through
the provisions of such parts; and
``(iii) provides, after such deductible is met
for a year and for all subsequent expenses for
items and services referred to in clause (i) in
the year, for a level of reimbursement that is not
less than--
``(I) 100 percent of such expenses,
or
``(II) 100 percent of the amounts
that would have been paid (without
regard to any deductibles or
coinsurance) under parts A and B with
respect to such expenses,
whichever is less.
``(B) Deductible.--The amount of annual deductible
under an MSA plan--
``(i) for contract year 1999 shall be not more
than $6,000; and
``(ii) for a subsequent contract year shall be
not more than the maximum amount of such
deductible for the previous contract year under
this subparagraph increased by the national per
capita Medicare+Choice growth percentage under
section 1853(c)(6) for the year.
If the amount of the deductible under clause (ii) is not
a multiple of $50, the amount shall be rounded to the
nearest multiple of $50.
``(c) Other References to Other Terms.--
``(1) Medicare+choice eligible individual.--The term
`Medicare+Choice eligible individual' is defined in section
1851(a)(3).
``(2) Medicare+choice payment area.--The term
`Medicare+Choice payment area' is defined in section 1853(d).
``(3) National per capita medicare+choice growth
percentage.--The `national per capita Medicare+Choice growth
percentage' is defined in section 1853(c)(6).
``(4) Medicare+choice monthly basic beneficiary premium;
medicare+choice monthly supplemental beneficiary premium.--The
terms `Medicare+Choice monthly basic beneficiary premium' and
`Medicare+Choice monthly supplemental beneficiary premium' are
defined in section 1854(a)(2).
[[Page 111 STAT. 327]]
``(d) Coordinated Acute and Long-Term Care Benefits Under a
Medicare+Choice Plan.--Nothing in this part shall be construed as
preventing a State from coordinating benefits under a medicaid plan
under title XIX with those provided under a Medicare+Choice plan in a
manner that assures continuity of a full-range of acute care and long-
term care services to poor elderly or disabled individuals eligible for
benefits under this title and under such plan.
``(e) Restriction on Enrollment for Certain Medicare+Choice Plans.--
``(1) In general.--In the case of a Medicare+Choice
religious fraternal benefit society plan described in paragraph
(2), notwithstanding any other provision of this part to the
contrary and in accordance with regulations of the Secretary,
the society offering the plan may restrict the enrollment of
individuals under this part to individuals who are members of
the church, convention, or group described in paragraph (3)(B)
with which the society is affiliated.
``(2) Medicare+choice religious fraternal benefit society
plan described.--For purposes of this subsection, a
Medicare+Choice religious fraternal benefit society plan
described in this paragraph is a Medicare+Choice plan described
in section 1851(a)(2)(A) that--
``(A) is offered by a religious fraternal benefit
society described in paragraph (3) only to members of
the church, convention, or group described in paragraph
(3)(B); and
``(B) permits all such members to enroll under the
plan without regard to health status-related factors.
Nothing in this subsection shall be construed as waiving any
plan requirements relating to financial solvency.
``(3) Religious fraternal benefit society defined.--For
purposes of paragraph (2)(A), a `religious fraternal benefit
society' described in this section is an organization that--
``(A) is described in section 501(c)(8) of the
Internal Revenue Code of 1986 and is exempt from
taxation under section 501(a) of such Act;
``(B) is affiliated with, carries out the tenets of,
and shares a religious bond with, a church or convention
or association of churches or an affiliated group of
churches;
``(C) offers, in addition to a Medicare+Choice
religious fraternal benefit society plan, health
coverage to individuals not entitled to benefits under
this title who are members of such church, convention,
or group; and
``(D) does not impose any limitation on membership
in the society based on any health status-related
factor.
``(4) Payment adjustment.--Under regulations of the
Secretary, in the case of individuals enrolled under this part
under a Medicare+Choice religious fraternal benefit society plan
described in paragraph (2), the Secretary shall provide for such
adjustment to the payment amounts otherwise established under
section 1854 as may be appropriate to assure an appropriate
payment level, taking into account the actuarial characteristics
and experience of such individuals.''.
[[Page 111 STAT. 328]]
SEC. 4002. TRANSITIONAL RULES FOR CURRENT MEDICARE HMO PROGRAM.
(a) Authorizing Transitional Waiver of 50:50 Rule.--Section 1876(f)
(42 U.S.C. 1395mm(f)) is amended--
(1) in paragraph (1)--
(A) by striking ``Each'' and inserting ``For
contract periods beginning before January 1, 1999,
each''; and
(B) by striking ``or under a State plan approved
under title XIX'';
(2) in paragraph (2), by striking ``The Secretary'' and
inserting ``Subject to paragraph (4), the Secretary'', and
(3) by adding at the end the following:
``(4) Effective <<NOTE: Effective date.>> for contract periods
beginning after December 31, 1996, the Secretary may waive or modify the
requirement imposed by paragraph (1) to the extent the Secretary finds
that it is in the public interest.''.
(b) Transition.--
(1) Risk-sharing contracts.--Section 1876 (42 U.S.C. 1395mm)
is amended by adding at the end the following new subsections:
``(k)(1) Except as provided in paragraph (2)--
``(A) on or after the date standards for Medicare+Choice
organizations and plans are first established under section
1856(b)(1), the Secretary shall not enter into any risk-sharing
contract under this section with an eligible organization; and
``(B) for any contract year beginning on or after January 1,
1999, the Secretary shall not renew any such contract.
``(2) An individual who is enrolled in part B only and is enrolled
in an eligible organization with a risk-sharing contract under this
section on December 31, 1998, may continue enrollment in such
organization in accordance with regulations described in section
1856(b)(1).
``(3) Notwithstanding subsection (a), the Secretary shall provide
that payment amounts under risk-sharing contracts under this section for
months in a year (beginning with January 1998) shall be computed--
``(A) with respect to individuals entitled to benefits under
both parts A and B, by substituting payment rates under section
1853(a) for the payment rates otherwise established under
section 1876(a), and
``(B) with respect to individuals only entitled to benefits
under part B, by substituting an appropriate proportion of such
rates (reflecting the relative proportion of payments under this
title attributable to such part) for the payment rates otherwise
established under subsection (a).
``(4) <<NOTE: Applicability.>> The following requirements shall
apply to eligible organizations with risk-sharing contracts under this
section in the same manner as they apply to Medicare+Choice
organizations under part C:
``(A) Data collection requirements under section
1853(a)(3)(B).
``(B) Restrictions on imposition of premium taxes under
section 1854(g) in relating to payments to such organizations
under this section.
``(C) The requirement to accept enrollment of new enrollees
during November 1998 under section 1851(e)(6).
``(D) Payments under section 1857(e)(2).''.
[[Page 111 STAT. 329]]
(2) Reasonable cost contracts.--
(A) Phase out of contracts.--Section 1876(h) (42
U.S.C. 1395mm(h)) is amended by adding at the end the
following:
``(5)(A) After the date of the enactment of this paragraph, the
Secretary may not enter into a reasonable cost reimbursement contract
under this subsection (if the contract is not in effect as of such
date), except for a contract with an eligible organization which,
immediately previous to entering into such contract, had an agreement in
effect under section 1833(a)(1)(A).
``(B) The Secretary may not extend or renew a reasonable cost
reimbursement contract under this subsection for any period beyond
December 31, 2002.''.
(B) Report <<NOTE: 42 USC 1395mm note.>> on
impact.--By not later than January 1, 2001, the
Secretary of Health and Human Services shall submit to
Congress a report that analyzes the potential impact of
termination of reasonable cost reimbursement contracts,
pursuant to the amendment made by subparagraph (A), on
medicare beneficiaries enrolled under such contracts and
on the medicare program. The report shall include such
recommendations regarding any extension or transition
with respect to such contracts as the Secretary deems
appropriate.
(c) Enrollment <<NOTE: 42 USC 1395w-21 note.>> Transition Rule.--An
individual who is enrolled on December 31, 1998, with an eligible
organization under section 1876 of the Social Security Act (42 U.S.C.
1395mm) shall be considered to be enrolled with that organization on
January 1, 1999, under part C of title XVIII of such Act if that
organization has a contract under that part for providing services on
January 1, 1999 (unless the individual has disenrolled effective on that
date).
(d) Advance Directives.--Section 1866(f) (42 U.S.C. 1395cc(f)) is
amended--
(1) in paragraph (1)--
(A) by inserting ``1855(i),'' after ``1833(s),'',
and
(B) by inserting ``, Medicare+Choice organization,''
after ``provider of services''; and
(2) in paragraph (2)(E), by inserting ``or a Medicare+Choice
organization'' after ``section 1833(a)(1)(A)''.
(e) Extension of Provider Requirement.--Section 1866(a)(1)(O) (42
U.S.C. 1395cc(a)(1)(O)) is amended--
(1) by striking ``in the case of hospitals and skilled
nursing facilities,'';
(2) by striking ``inpatient hospital and extended care'';
(3) by inserting ``with a Medicare+Choice organization under
part C or'' after ``any individual enrolled'';
(4) by striking ``(in the case of hospitals) or limits (in
the case of skilled nursing facilities)''; and
(5) by inserting ``(less any payments under sections
1886(d)(11) and 1886(h)(3)(D))'' after ``under this title''.
(f) Additional Conforming Changes.--
(1) Conforming <<NOTE: 42 USC note prec. 1395x.>> references
to previous part C.--Any reference in law (in effect before the
date of the enactment of this Act) to part C of title XVIII of
the Social Security Act is deemed a reference to part D of such
title (as in effect after such date).
[[Page 111 STAT. 330]]
(2) Secretarial <<NOTE: 42 USC 1395w-21 note.>> submission
of legislative proposal.--Not later than 6 months after the date
of the enactment of this Act, the Secretary of Health and Human
Services shall submit to the appropriate committees of Congress
a legislative proposal providing for such technical and
conforming amendments in the law as are required by the
provisions of this chapter.
(g) Immediate <<NOTE: 42 USC 1395w-27 note.>> Effective Date for
Certain Requirements for Demonstrations.--Section 1857(e)(2) of the
Social Security Act (requiring contribution to certain costs related to
the enrollment process comparative materials) applies to demonstrations
with respect to which enrollment is effected or coordinated under
section 1851 of such Act.
(h) Transition <<NOTE: 42 USC 1395mm note.>> Rule for PSO
Enrollment.--In applying subsection (g)(1) of section 1876 of the Social
Security Act (42 U.S.C. 1395mm) to a risk-sharing contract entered into
with an eligible organization that is a provider-sponsored organization
(as defined in section 1855(d)(1) of such Act, as inserted by section
5001) for a contract year beginning on or after January 1, 1998, there
shall be substituted for the minimum number of enrollees provided under
such section the minimum number of enrollees permitted under section
1857(b)(1) of such Act (as so inserted).
(i) Publication <<NOTE: 42 USC 1395w-23 note.>> of New Capitation
Rates.--Not later than 4 weeks after the date of the enactment of this
Act, the Secretary of Health and Human Services shall announce the
annual Medicare+Choice capitation rates for 1998 under section 1853(b)
of the Social Security Act.
(j) Elimination of Health Care Prepayment Plan Option for Entities
Eligible to Participate As Managed Care Organization.--
(1) Elimination of option.--
(A) In general.--Section 1833(a)(1)(A) (42 U.S.C.
1395l(a)(1)(A)) is amended by inserting ``(and either is
sponsored by a union or employer, or does not provide,
or arrange for the provision of, any inpatient hospital
services)'' after ``prepayment basis''.
(B) Effective <<NOTE: 42 USC 1395l note.>> date.--
The amendment made by subparagraph (A) applies to new
contracts entered into after the date of enactment of
this Act and, with respect to contracts in effect as of
such date, shall apply to payment for services furnished
after December 31, 1998.
(2) Medigap <<NOTE: Effective date.>> conforming
amendment.--Effective January 1, 1999, section 1882(g)(1) (42
U.S.C. 1395ss(g)(1)) is amended by striking ``, during the
period beginning on the date specified in subsection (p)(1)(C)
and ending on December 31, 1995,''.
SEC. 4003. CONFORMING CHANGES IN MEDIGAP PROGRAM.
(a) Conforming Amendments to Medicare+Choice Changes.--
(1) In general.--Section 1882(d)(3)(A)(i) (42 U.S.C.
1395ss(d)(3)(A)(i)) is amended--
(A) in the matter before subclause (I), by inserting
``(including an individual electing a Medicare+Choice
plan under section 1851)'' after ``of this title''; and
(B) in subclause (II)--
(i) by inserting ``in the case of an
individual not electing a Medicare+Choice plan''
after ``(II)'', and
[[Page 111 STAT. 331]]
(ii) by inserting before the comma at the end
the following: ``or in the case of an individual
electing a Medicare+Choice plan, a medicare
supplemental policy with knowledge that the policy
duplicates health benefits to which the individual
is otherwise entitled under the Medicare+Choice
plan or under another medicare supplemental
policy''.
(2) Conforming amendments.--Section 1882(d)(3)(B)(i)(I) (42
U.S.C. 1395ss(d)(3)(B)(i)(I)) is amended by inserting
``(including any Medicare+Choice plan)'' after ``health
insurance policies''.
(3) Medicare+choice plans not treated as medicare
supplementary policies.--Section 1882(g)(1) (42 U.S.C.
1395ss(g)(1)) is amended by inserting ``or a Medicare+Choice
plan or'' after ``does not include''.
(b) Additional Rules Relating to Individuals Enrolled in MSA Plans
and Private Fee-for-Service Plans.--Section 1882 (42 U.S.C. 1395ss) is
further amended by adding at the end the following new subsection:
``(u)(1) It is unlawful for a person to sell or issue a policy
described in paragraph (2) to an individual with knowledge that the
individual has in effect under section 1851 an election of an MSA plan
or a Medicare+Choice private fee-for-service plan.
``(2)(A) A policy described in this subparagraph is a health
insurance policy (other than a policy described in subparagraph (B))
that provides for coverage of expenses that are otherwise required to be
counted toward meeting the annual deductible amount provided under the
MSA plan.
``(B) A policy described in this subparagraph is any of the
following:
``(i) A policy that provides coverage (whether through
insurance or otherwise) for accidents, disability, dental care,
vision care, or long-term care.
``(ii) A policy of insurance to which substantially all of
the coverage relates to--
``(I) liabilities incurred under workers'
compensation laws,
``(II) tort liabilities,
``(III) liabilities relating to ownership or use of
property, or
``(IV) such other similar liabilities as the
Secretary may specify by regulations.
``(iii) A policy of insurance that provides coverage for a
specified disease or illness.
``(iv) A policy of insurance that pays a fixed amount per
day (or other period) of hospitalization.''.
Subchapter B--Special Rules for Medicare+Choice Medical Savings Accounts
SEC. 4006. MEDICARE+CHOICE MSA.
(a) In General.--Part III of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to amounts specifically excluded
from gross income) is amended by redesignating section 138 as section
139 <<NOTE: 26 USC 138, 139.>> and by inserting after section 137 the
following new section:
[[Page 111 STAT. 332]]
``SEC. 138. <<NOTE: 26 USC 138.>> MEDICARE+CHOICE MSA.
``(a) Exclusion.--Gross income shall not include any payment to the
Medicare+Choice MSA of an individual by the Secretary of Health and
Human Services under part C of title XVIII of the Social Security Act.
``(b) Medicare+Choice MSA.--For purposes of this section, the term
`Medicare+Choice MSA' means a medical savings account (as defined in
section 220(d))--
``(1) which is designated as a Medicare+Choice MSA,
``(2) with respect to which no contribution may be made
other than--
``(A) a contribution made by the Secretary of Health
and Human Services pursuant to part C of title XVIII of
the Social Security Act, or
``(B) a trustee-to-trustee transfer described in
subsection (c)(4),
``(3) the governing instrument of which provides that
trustee-to-trustee transfers described in subsection (c)(4) may
be made to and from such account, and
``(4) which is established in connection with an MSA plan
described in section 1859(b)(3) of the Social Security Act.
``(c) Special Rules for Distributions.--
``(1) Distributions for qualified medical expenses.--In
applying section 220 to a Medicare+Choice MSA--
``(A) qualified medical expenses shall not include
amounts paid for medical care for any individual other
than the account holder, and
``(B) section 220(d)(2)(C) shall not apply.
``(2) Penalty for distributions from medicare+choice msa not
used for qualified medical expenses if minimum balance not
maintained.--
``(A) In general.--The tax imposed by this chapter
for any taxable year in which there is a payment or
distribution from a Medicare+Choice MSA which is not
used exclusively to pay the qualified medical expenses
of the account holder shall be increased by 50 percent
of the excess (if any) of--
``(i) the amount of such payment or
distribution, over
``(ii) the excess (if any) of--
``(I) the fair market value of the
assets in such MSA as of the close of
the calendar year preceding the calendar
year in which the taxable year begins,
over
``(II) an amount equal to 60 percent
of the deductible under the
Medicare+Choice MSA plan covering the
account holder as of January 1 of the
calendar year in which the taxable year
begins.
Section 220(f)(4) shall not apply to any payment or
distribution from a Medicare+Choice MSA.
``(B) Exceptions.--Subparagraph (A) shall not apply
if the payment or distribution is made on or after the
date the account holder--
``(i) becomes disabled within the meaning of
section 72(m)(7), or
``(ii) dies.
[[Page 111 STAT. 333]]
``(C) Special rules.--For purposes of subparagraph
(A)--
``(i) all Medicare+Choice MSAs of the account
holder shall be treated as 1 account,
``(ii) all payments and distributions not used
exclusively to pay the qualified medical expenses
of the account holder during any taxable year
shall be treated as 1 distribution, and
``(iii) any distribution of property shall be
taken into account at its fair market value on the
date of the distribution.
``(3) Withdrawal of erroneous contributions.--Section
220(f)(2) and paragraph (2) of this subsection shall not apply
to any payment or distribution from a Medicare+Choice MSA to the
Secretary of Health and Human Services of an erroneous
contribution to such MSA and of the net income attributable to
such contribution.
``(4) Trustee-to-trustee transfers.--Section 220(f)(2) and
paragraph (2) of this subsection shall not apply to any trustee-
to-trustee transfer from a Medicare+Choice MSA of an account
holder to another Medicare+Choice MSA of such account holder.
``(d) Special <<NOTE: Applicability.>> Rules for Treatment of
Account After Death of Account Holder.--In applying section 220(f)(8)(A)
to an account which was a Medicare+Choice MSA of a decedent, the rules
of section 220(f) shall apply in lieu of the rules of subsection (c) of
this section with respect to the spouse as the account holder of such
Medicare+Choice MSA.
``(e) Reports.--In the case of a Medicare+Choice MSA, the report
under section 220(h)--
``(1) shall include the fair market value of the assets in
such Medicare+Choice MSA as of the close of each calendar year,
and
``(2) shall be furnished to the account holder--
``(A) not later than January 31 of the calendar year
following the calendar year to which such reports
relate, and
``(B) in such manner as the Secretary prescribes in
such regulations.
``(f) Coordination With Limitation on Number of Taxpayers Having
Medical Savings Accounts.--Subsection (i) of section 220 shall not apply
to an individual with respect to a Medicare+Choice MSA, and
Medicare+Choice MSA's shall not be taken into account in determining
whether the numerical limitations under section 220(j) are exceeded.''.
(b) Technical Amendments.--
(1) The last sentence of section 4973(d) of such
Code <<NOTE: 26 USC 4973.>> is amended by inserting ``or section
138(c)(3)'' after ``section 220(f)(3)''.
(2) Subsection (b) of section 220 of such Code <<NOTE: 26
USC 220.>> is amended by adding at the end the following new
paragraph:
``(7) Medicare eligible individuals.--The limitation under
this subsection for any month with respect to an individual
shall be zero for the first month such individual is entitled to
benefits under title XVIII of the Social Security Act and for
each month thereafter.''.
[[Page 111 STAT. 334]]
(3) The table of sections for part III of subchapter B of
chapter 1 of such Code is amended by striking the last item and
inserting the following:
``Sec. 138. Medicare+Choice MSA.
``Sec. 139. Cross references to other Acts.''.
(c) Effective <<NOTE: 26 USC 138 note.>> Date.--The amendments made
by this section shall apply to taxable years beginning after December
31, 1998.
CHAPTER 2--DEMONSTRATIONS
Subchapter <<NOTE: 42 USC 1395w-23 note.>> A--Medicare+Choice
Competitive Pricing Demonstration Project
SEC. 4011. MEDICARE PREPAID COMPETITIVE PRICING DEMONSTRATION PROJECT.
(a) Establishment of Project.--The Secretary of Health and Human
Services (in this subchapter referred to as the ``Secretary'') shall
establish a demonstration project (in this subchapter referred to as the
``project'') under which payments to Medicare+Choice organizations in
medicare payment areas in which the project is being conducted are
determined in accordance with a competitive pricing methodology
established under this subchapter.
(b) Designation of 7 Medicare Payment Areas Covered by Project.--
(1) In general.--The Secretary shall designate, in
accordance with the recommendations of the Competitive Pricing
Advisory Committee under paragraphs (2) and (3), medicare
payment areas as areas in which the project under this
subchapter will be conducted. In this section, the term
``Competitive Pricing Advisory Committee'' means the Competitive
Pricing Advisory Committee established under section 4012(a).
(2) Initial designation of 4 areas.--
(A) In general.--The Competitive Pricing Advisory
Committee shall recommend to the Secretary, consistent
with subparagraph (B), the designation of 4 specific
areas as medicare payment areas to be included in the
project. Such recommendations shall be made in a manner
so as to ensure that payments under the project in 2
such areas will begin on January 1, 1999, and in 2 such
areas will begin on January 1, 2000.
(B) Location <<NOTE: Urban and rural areas.>> of
designation.--Of the 4 areas recommended under
subparagraph (A), 3 shall be in urban areas and 1 shall
be in a rural area.
(3) Designation of additional 3 areas.--Not later than
December 31, 2001, the Competitive Pricing Advisory Committee
may recommend to the Secretary the designation of up to 3
additional, specific medicare payment areas to be included in
the project.
(c) Project Implementation.--
(1) In general.--Subject to paragraph (2), the Secretary
shall for each medicare payment area designated under subsection
(b)--
(A) in accordance with the recommendations of the
Competitive Pricing Advisory Committee--
(i) establish the benefit design among plans
offered in such area, and
[[Page 111 STAT. 335]]
(ii) structure the method for selecting plans
offered in such area; and
(B) in consultation with such Committee--
(i) establish methods for setting the price to
be paid to plans, including, if the Secretaries
determines appropriate, the rewarding and
penalizing of Medicare+Choice plans in the area on
the basis of the attainment of, or failure to
attain, applicable quality standards, and
(ii) provide for the collection of plan
information (including information concerning
quality and access to care), the dissemination of
information, and the methods of evaluating the
results of the project.
(2) Consultation.--The Secretary shall take into account the
recommendations of the area advisory committee established in
section 4012(b), in implementing a project design for any area,
except that no modifications may be made in the project design
without consultation with the Competitive Pricing Advisory
Committee. In no case may the Secretary change the designation
of an area based on recommendations of any area advisory
committee.
(d) Monitoring and Report.--
(1) Monitoring impact.--Taking into consideration the
recommendations of the Competitive Pricing Advisory Committee
and the area advisory committees, the Secretary shall closely
monitor and measure the impact of the project in the different
areas on the price and quality of, and access to, medicare
covered services, choice of health plans, changes in enrollment,
and other relevant factors.
(2) Report.--Not later than December 31, 2002, the Secretary
shall submit to Congress a report on the progress under the
project under this subchapter, including a comparison of the
matters monitored under paragraph (1) among the different
designated areas. The report may include any legislative
recommendations for extending the project to the entire medicare
population.
(e) Waiver Authority.--The Secretary of Health and Human Services
may waive such requirements of title XVIII of the Social Security Act
(as amended by this Act) as may be necessary for the purposes of
carrying out the project.
(f) Relationship to Other Authority.--Except pursuant to this
subchapter, the Secretary of Health and Human Services may not conduct
or continue any medicare demonstration project relating to payment of
health maintenance organizations, Medicare+Choice organizations, or
similar prepaid managed care entities on the basis of a competitive
bidding process or pricing system described in subsection (a).
(g) No Additional Costs to Medicare Program.--The aggregate payments
to Medicare+Choice organizations under the project for any designated
area for a fiscal year may not exceed the aggregate payments to such
organizations that would have been made under title XVIII of the Social
Security Act (42 U.S.C. 1395 et seq.), as amended by section 4001, if
the project had not been conducted.
(h) Definitions.--Any term used in this subchapter which is also
used in part C of title XVIII of the Social Security Act,
[[Page 111 STAT. 336]]
as amended by section 4001, shall have the same meaning as when used in
such part.
SEC. 4012. ADVISORY COMMITTEES.
(a) Competitive Pricing Advisory Committee.--
(1) In general.--Before implementing the project under this
subchapter, the Secretary shall appoint the Competitive Pricing
Advisory Committee, including independent actuaries, individuals
with expertise in competitive health plan pricing, and an
employee of the Office of Personnel Management with expertise in
the administration of the Federal Employees Health Benefit
Program, to make recommendations to the Secretary concerning the
designation of areas for inclusion in the project and
appropriate research design for implementing the project.
(2) Initial recommendations.--The Competitive Pricing
Advisory Committee initially shall submit recommendations
regarding the area selection, benefit design among plans
offered, structuring choice among health plans offered, methods
for setting the price to be paid to plans, collection of plan
information (including information concerning quality and access
to care), information dissemination, and methods of evaluating
the results of the project.
(3) Quality recommendation.--The Competitive Pricing
Advisory Committee shall study and make recommendations
regarding the feasibility of providing financial incentives and
penalties to plans operating under the project that meet, or
fail to meet, applicable quality standards.
(4) Advice during implementation.--Upon implementation of
the project, the Competitive Pricing Advisory Committee shall
continue to advise the Secretary on the application of the
design in different areas and changes in the project based on
experience with its operations.
(5) Sunset.--The Competitive Pricing Advisory Committee
shall terminate on December 31, 2004.
(b) Appointment of Area Advisory Committee.--Upon the designation of
an area for inclusion in the project, the Secretary shall appoint an
area advisory committee, composed of representatives of health plans,
providers, and medicare beneficiaries in the area, to advise the
Secretary concerning how the project will be implemented in the area.
Such advice may include advice concerning the marketing and pricing of
plans in the area and other salient factors. The duration of such a
committee for an area shall be for the duration of the operation of the
project in the area.
(c) Special application.--Notwithstanding section 9(c) of the
Federal Advisory Committee Act (5 U.S.C. App.), the Competitive Pricing
Advisory Commission and any area advisory committee (described in
subsection (b)) may meet as soon as the members of the commission or
committee, respectively, are appointed.
Subchapter B--Social Health Maintenance Organizations
SEC. 4014. SOCIAL HEALTH MAINTENANCE ORGANIZATIONS (SHMOS).
(a) Extension of Demonstration Project Authorities.--Section 4018(b)
of the Omnibus Budget Reconciliation Act of <<NOTE: 101 Stat. 1330-
65.>> 1987 is amended--
[[Page 111 STAT. 337]]
(1) in paragraph (1), by striking ``1997'' and inserting
``2000'', and
(2) in paragraph (4), by striking ``1998'' and inserting
``2001''.
(b) Expansion of Cap.--Section 13567(c) of the Omnibus Budget
Reconciliation Act of <<NOTE: 107 Stat. 608.>> 1993 is amended by
striking ``12,000'' and inserting ``36,000''.
(c) Report <<NOTE: 42 USC 1395w-21 note.>> on Integration and
Transition.--
(1) In general.--The Secretary of Health and Human Services
shall submit to Congress, by not later than January 1, 1999, a
plan for the integration of health plans offered by social
health maintenance organizations (including SHMO I and SHMO II
sites developed under section 2355 of the Deficit Reduction Act
of 1984 and under the amendment made by section 4207(b)(3)(B)(i)
of OBRA-1990, respectively) and similar plans as an option under
the Medicare+Choice program under part C of title XVIII of the
Social Security Act.
(2) Provision for transition.--Such plan shall include a
transition for social health maintenance organizations operating
under demonstration project authority under such section.
(3) Payment policy.--The report shall also include
recommendations on appropriate payment levels for plans offered
by such organizations, including an analysis of the application
of risk adjustment factors appropriate to the population served
by such organizations.
Subchapter C--Medicare Subvention Demonstration Project for Military
Retirees
SEC. 4015. MEDICARE SUBVENTION DEMONSTRATION PROJECT FOR MILITARY
RETIREES.
(a) In General.--Title XVIII (42 U.S.C. 1395 et seq.) (as amended by
sections 4603 and 4801) is amended by adding at the end the following:
``medicare subvention demonstration project for <<NOTE: 42 usc
1395ggg.>> military retirees
``Sec. 1896. (a) Definitions.--In this section:
``(1) Administering secretaries.--The term `administering
Secretaries' means the Secretary and the Secretary of Defense
acting jointly.
``(2) Demonstration project; project.--The terms
`demonstration project' and `project' mean the demonstration
project carried out under this section.
``(3) Designated provider.--The term `designated provider'
has the meaning given that term in section 721(5) of the
National Defense Authorization Act For Fiscal Year 1997 (Public
Law 104-201; 110 Stat. 2593; 10 U.S.C. 1073 note).
``(4) Medicare-eligible military retiree or dependent.--The
term `medicare-eligible military retiree or dependent' means an
individual described in section 1074(b) or 1076(b) of title 10,
United States Code, who--
``(A) would be eligible for health benefits under
section 1086 of such title by reason of subsection
(c)(1) of such section 1086 but for the operation of
subsection (d) of such section 1086;
[[Page 111 STAT. 338]]
``(B)(i) is entitled to benefits under part A of
this title; and
``(ii) if the individual was entitled to such
benefits before July 1, 1997, received health care items
or services from a health care facility of the uniformed
services before that date, but after becoming entitled
to benefits under part A of this title;
``(C) is enrolled for benefits under part B of this
title; and
``(D) has attained age 65.
``(5) Medicare health care services.--The term `medicare
health care services' means items or services covered under part
A or B of this title.
``(6) Military treatment facility.--The term `military
treatment facility' means a facility referred to in section
1074(a) of title 10, United States Code.
``(7) TRICARE.--The term `TRICARE' has the same meaning as
the term `TRICARE program' under section 711 of the National
Defense Authorization Act for Fiscal Year 1996 (10 U.S.C. 1073
note).
``(8) Trust funds.--The term `trust funds' means the Federal
Hospital Insurance Trust Fund established in section 1817 and
the Federal Supplementary Medical Insurance Trust Fund
established in section 1841.
``(b) Demonstration Project.--
``(1) In general.--
``(A) Establishment.--The administering Secretaries
are authorized to establish a demonstration project
(under an agreement entered into by the administering
Secretaries) under which the Secretary shall reimburse
the Secretary of Defense, from the trust funds, for
medicare health care services furnished to certain
medicare-eligible military retirees or dependents in a
military treatment facility or by a designated provider.
``(B) Agreement.--The agreement entered into under
subparagraph (A) shall include at a minimum--
``(i) a description of the benefits to be
provided to the participants of the demonstration
project established under this section;
``(ii) a description of the eligibility rules
for participation in the demonstration project,
including any cost sharing requirements;
``(iii) a description of how the demonstration
project will satisfy the requirements under this
title;
``(iv) a description of the sites selected
under paragraph (2);
``(v) a description of how reimbursement
requirements under subsection (i) and maintenance
of effort requirements under subsection (j) will
be implemented in the demonstration project;
``(vi) a statement that the Secretary shall
have access to all data of the Department of
Defense that the Secretary determines is necessary
to conduct independent estimates and audits of the
maintenance of effort requirement, the annual
reconciliation, and related matters required under
the demonstration project;
[[Page 111 STAT. 339]]
``(vii) a description of any requirement that
the Secretary waives pursuant to subsection (d);
and
``(viii) a certification, provided after
review by the administering Secretaries, that any
entity that is receiving payments by reason of the
demonstration project has sufficient--
``(I) resources and expertise to
provide, consistent with payments under
subsection (i), the full range of
benefits required to be provided to
beneficiaries under the project; and
``(II) information and billing
systems in place to ensure the accurate
and timely submission of claims for
benefits and to ensure that providers of
services, physicians, and other health
care professionals are reimbursed by the
entity in a timely and accurate manner.
``(2) Number of sites.--The project established under this
section shall be conducted in no more than 6 sites, designated
jointly by the administering Secretaries after review of all
TRICARE regions.
``(3) Restriction.--No new military treatment facilities
will be built or expanded with funds from the demonstration
project.
``(4) Duration.--The administering Secretaries shall conduct
the demonstration project during the 3-year period beginning on
January 1, 1998.
``(5) Report.--At least 60 days prior to the commencement of
the demonstration project, the administering Secretaries shall
submit a copy of the agreement entered into under paragraph (1)
to the committees of jurisdiction under this title.
``(c) Crediting of Payments.--A payment received by the Secretary of
Defense under the demonstration project shall be credited to the
applicable Department of Defense medical appropriation (and within that
appropriation). Any such payment received during a fiscal year for
services provided during a prior fiscal year may be obligated by the
Secretary of Defense during the fiscal year during which the payment is
received.
``(d) Waiver of Certain Medicare Requirements.--
``(1) Authority.--
``(A) In general.--Except as provided under
subparagraph (B), the demonstration project shall meet
all requirements of Medicare+Choice plans under part C
of this title and regulations pertaining thereto, and
other requirements for receiving medicare payments,
except that the prohibition of payments to Federal
providers of services under sections 1814(c) and
1835(d), and paragraphs (2) and (3) of section 1862(a)
shall not apply.
``(B) Waiver.--Except as provided in paragraph (2),
the Secretary is authorized to waive any requirement
described under subparagraph (A), or approve equivalent
or alternative ways of meeting such a requirement, but
only if such waiver or approval--
``(i) reflects the unique status of the
Department of Defense as an agency of the Federal
Government; and
``(ii) is necessary to carry out the
demonstration project.
[[Page 111 STAT. 340]]
``(2) Beneficiary protections and other matters.--The
demonstration project shall comply with the requirements of part
C of this title that relate to beneficiary protections and other
matters, including such requirements relating to the following
areas:
``(A) Enrollment and disenrollment.
``(B) Nondiscrimination.
``(C) Information provided to beneficiaries.
``(D) Cost-sharing limitations.
``(E) Appeal and grievance procedures.
``(F) Provider participation.
``(G) Access to services.
``(H) Quality assurance and external review.
``(I) Advance directives.
``(J) Other areas of beneficiary protections that
the Secretary determines are applicable to such project.
``(e) Inspector General.--Nothing in the agreement entered into
under subsection (b) shall limit the Inspector General of the Department
of Health and Human Services from investigating any matters regarding
the expenditure of funds under this title for the demonstration project,
including compliance with the provisions of this title and all other
relevant laws.
``(f) Voluntary Participation.--Participation of medicare-eligible
military retirees or dependents in the demonstration project shall be
voluntary.
``(g) TRICARE Health Care Plans.--
``(1) Modification of tricare contracts.--In carrying out
the demonstration project, the Secretary of Defense is
authorized to amend existing TRICARE contracts (including
contracts with designated providers) in order to provide the
medicare health care services to the medicare-eligible military
retirees and dependents enrolled in the demonstration project
consistent with part C of this title.
``(2) Health care benefits.--The administering Secretaries
shall prescribe the minimum health care benefits to be provided
under such a plan to medicare-eligible military retirees or
dependents enrolled in the plan. Those benefits shall include at
least all medicare health care services covered under this
title.
``(h) Additional Plans.--Notwithstanding any provisions of title 10,
United States Code, the administering Secretaries may agree to include
in the demonstration project any of the Medicare+Choice plans described
in section 1851(a)(2)(A), and such agreement may include an agreement
between the Secretary of Defense and the Medicare+Choice organization
offering such plan to provide medicare health care services to medicare-
eligible military retirees or dependents and for such Secretary to
receive payments from such organization for the provision of such
services.
``(i) Payments Based on Regular Medicare Payment Rates.--
``(1) In general.--Subject to the succeeding provisions of
this subsection, the Secretary shall reimburse the Secretary of
Defense for services provided under the demonstration project at
a rate equal to 95 percent of the amount paid to a
Medicare+Choice organization under part C of this title with
respect to such an enrollee. <<NOTE: Regulations.>> In cases in
which a payment amount may not otherwise be readily computed,
the Secretary shall
[[Page 111 STAT. 341]]
establish rules for computing equivalent or comparable payment
amounts.
``(2) Exclusion of certain amounts.--In computing the amount
of payment under paragraph (1), the following shall be excluded:
``(A) Special payments.--Any amount attributable to
an adjustment under subparagraphs (B) and (F) of section
1886(d)(5) and subsection (h) of such section.
``(B) Percentage of capital payments.--An amount
determined by the administering Secretaries for amounts
attributable to payments for capital-related costs under
subsection (g) of such section.
``(3) Periodic payments from medicare trust funds.--Payments
under this subsection shall be made--
``(A) on a periodic basis consistent with the
periodicity of payments under this title; and
``(B) in appropriate part, as determined by the
Secretary, from the trust funds.
``(4) Cap on amount.--The aggregate amount to be reimbursed
under this subsection pursuant to the agreement entered into
between the administering Secretaries under subsection (b) shall
not exceed a total of--
``(A) $50,000,000 for calendar year 1998;
``(B) $60,000,000 for calendar year 1999; and
``(C) $65,000,000 for calendar year 2000.
``(j) Maintenance of Effort.--
``(1) Monitoring effect of demonstration program on costs to
medicare program.--
``(A) In general.--The administering Secretaries, in
consultation with the Comptroller General, shall closely
monitor the expenditures made under the medicare program
for medicare-eligible military retirees or dependents
during the period of the demonstration project compared
to the expenditures that would have been made for such
medicare-eligible military retirees or dependents during
that period if the demonstration project had not been
conducted. The agreement entered into by the
administering Secretaries under subsection (b) shall
require any participating military treatment facility to
maintain the level of effort for space available care to
medicare-eligible military retirees or dependents.
``(B) Annual report by the comptroller general.--Not
later than December 31 of each year during which the
demonstration project is conducted, the Comptroller
General shall submit to the administering Secretaries
and the appropriate committees of Congress a report on
the extent, if any, to which the costs of the Secretary
under the medicare program under this title increased
during the preceding fiscal year as a result of the
demonstration project.
``(2) Required response in case of increase in costs.--
``(A) In general.--If the administering Secretaries
find, based on paragraph (1), that the expenditures
under the medicare program under this title increased
(or are expected to increase) during a fiscal year
because of the demonstration project, the administering
Secretaries shall take such steps as may be needed--
[[Page 111 STAT. 342]]
``(i) to recoup for the medicare program the
amount of such increase in expenditures; and
``(ii) to prevent any such increase in the
future.
``(B) Steps.--Such steps--
``(i) under subparagraph (A)(i) shall include
payment of the amount of such increased
expenditures by the Secretary of Defense from the
current medical care appropriation of the
Department of Defense to the trust funds; and
``(ii) under subparagraph (A)(ii) shall
include suspending or terminating the
demonstration project (in whole or in part) or
lowering the amount of payment under subsection
(i)(1).
``(k) Evaluation and Reports.--
``(1) Independent evaluation.--The Comptroller General of
the United States shall conduct an evaluation of the
demonstration project, and shall submit annual reports on the
demonstration project to the administering Secretaries and to
the committees of jurisdiction in the Congress. The first report
shall be submitted not later than 12 months after the date on
which the demonstration project begins operation, and the final
report not later than 3\1/2\ years after that date. The
evaluation and reports shall include an assessment, based on the
agreement entered into under subsection (b), of the following:
``(A) Any savings or costs to the medicare program
under this title resulting from the demonstration
project.
``(B) The cost to the Department of Defense of
providing care to medicare-eligible military retirees
and dependents under the demonstration project.
``(C) A description of the effects of the
demonstration project on military treatment facility
readiness and training and the probable effects of the
project on overall Department of Defense medical
readiness and training.
``(D) Any impact of the demonstration project on
access to care for active duty military personnel and
their dependents.
``(E) An analysis of how the demonstration project
affects the overall accessibility of the uniformed
services treatment system and the amount of space
available for point-of-service care, and a description
of the unintended effects (if any) upon the normal
treatment priority system.
``(F) Compliance by the Department of Defense with
the requirements under this title.
``(G) The number of medicare-eligible military
retirees and dependents opting to participate in the
demonstration project instead of receiving health
benefits through another health insurance plan
(including benefits under this title).
``(H) A list of the health insurance plans and
programs that were the primary payers for medicare-
eligible military retirees and dependents during the
year prior to their participation in the demonstration
project and the distribution of their previous
enrollment in such plans and programs.
``(I) Any impact of the demonstration project on
private health care providers and beneficiaries under
this title that are not enrolled in the demonstration
project.
[[Page 111 STAT. 343]]
``(J) An assessment of the access to care and
quality of care for medicare-eligible military retirees
and dependents under the demonstration project.
``(K) An analysis of whether, and in what manner,
easier access to the uniformed services treatment system
affects the number of medicare-eligible military
retirees and dependents receiving medicare health care
services.
``(L) Any impact of the demonstration project on the
access to care for medicare-eligible military retirees
and dependents who did not enroll in the demonstration
project and for other individuals entitled to benefits
under this title.
``(M) A description of the difficulties (if any)
experienced by the Department of Defense in managing the
demonstration project and TRICARE contracts.
``(N) Any additional elements specified in the
agreement entered into under subsection (b).
``(O) Any additional elements that the Comptroller
General of the United States determines is appropriate
to assess regarding the demonstration project.
``(2) Report on extension and expansion of demonstration
project.--Not later than 6 months after the date of the
submission of the final report by the Comptroller General of the
United States under paragraph (1), the administering Secretaries
shall submit to Congress a report containing their
recommendation as to--
``(A) whether there is a cost to the health care
program under this title in conducting the demonstration
project, and whether the demonstration project could be
expanded without there being a cost to such health care
program or to the Federal Government;
``(B) whether to extend the demonstration project or
make the project permanent; and
``(C) whether the terms and conditions of the
project should be continued (or modified) if the project
is extended or expanded.''.
(b) Implementation <<NOTE: 42 USC 1395ggg note.>> Plan for Veterans
Subvention.--Not later than 12 months after the start of the
demonstration project, the Secretary of Health and Human Services and
the Secretary of Veterans Affairs shall jointly submit to Congress a
detailed implementation plan for a subvention demonstration project
(that follows the model of the demonstration project conducted under
section 1896 of the Social Security Act (as added by subsection (a)) to
begin in 1999 for veterans (as defined in section 101 of title 38,
United States Code) that are eligible for benefits under title XVIII of
the Social Security Act.
Subchapter D--Other Projects
SEC. 4016. <<NOTE: 42 USC 1395b-1 note.>> MEDICARE COORDINATED CARE
DEMONSTRATION PROJECT.
(a) Demonstration Projects.--
(1) In general.--The Secretary of Health and Human Services
(in this section referred to as the ``Secretary'') shall conduct
demonstration projects for the purpose of evaluating methods,
such as case management and other models of coordinated care,
that--
[[Page 111 STAT. 344]]
(A) improve the quality of items and services
provided to target individuals; and
(B) reduce expenditures under the medicare program
under title XVIII of the Social Security Act (42 U.S.C.
1395 et seq.) for items and services provided to target
individuals.
(2) Target individual defined.--In this section, the term
``target individual'' means an individual that has a chronic
illness, as defined and identified by the Secretary, and is
enrolled under the fee-for-service program under parts A and B
of title XVIII of the Social Security Act (42 U.S.C. 1395c et
seq.; 1395j et seq.).
(b) Program Design.--
(1) Initial design.--The Secretary shall evaluate best
practices in the private sector of methods of coordinated care
for a period of 1 year and design the demonstration project
based on such evaluation.
(2) Number <<NOTE: Urban and rural areas. District of
Columbia.>> and project areas.--Not later than 2 years after the
date of enactment of this Act, the Secretary shall implement at
least 9 demonstration projects, including--
(A) 5 projects in urban areas;
(B) 3 projects in rural areas; and
(C) 1 project within the District of Columbia which
is operated by a nonprofit academic medical center that
maintains a National Cancer Institute certified
comprehensive cancer center.
(3) Expansion of projects; implementation of demonstration
project results.--
(A) Expansion of projects.--If the initial report
under subsection (c) contains an evaluation that
demonstration projects--
(i) reduce expenditures under the medicare
program; or
(ii) do not increase expenditures under the
medicare program and increase the quality of
health care services provided to target
individuals and satisfaction of beneficiaries and
health care providers;
the Secretary shall continue the existing demonstration
projects and may expand the number of demonstration
projects.
(B) Implementation of demonstration project
results.--If a report under subsection (c) contains an
evaluation as described in subparagraph (A), the
Secretary may issue regulations to implement, on a
permanent basis, the components of the demonstration
project that are beneficial to the medicare program.
(c) Report to Congress.--
(1) In general.--Not later than 2 years after the Secretary
implements the initial demonstration projects under this
section, and biannually thereafter, the Secretary shall submit
to Congress a report regarding the demonstration projects
conducted under this section.
(2) Contents of report.--The report in paragraph (1) shall
include the following:
(A) A description of the demonstration projects
conducted under this section.
(B) An evaluation of--
[[Page 111 STAT. 345]]
(i) the cost-effectiveness of the
demonstration projects;
(ii) the quality of the health care services
provided to target individuals under the
demonstration projects; and
(iii) beneficiary and health care provider
satisfaction under the demonstration project.
(C) Any other information regarding the
demonstration projects conducted under this section that
the Secretary determines to be appropriate.
(d) Waiver Authority.--The Secretary shall waive compliance with the
requirements of title XVIII of the Social Security Act (42 U.S.C. 1395
et seq.) to such extent and for such period as the Secretary determines
is necessary to conduct demonstration projects.
(e) Funding.--
(1) Demonstration projects.--
(A) In general.--
(i) State projects.--Except as provided in
clause (ii), the Secretary shall provide for the
transfer from the Federal Hospital Insurance Trust
Fund and the Federal Supplementary Insurance Trust
Fund under title XVIII of the Social Security Act
(42 U.S.C. 1395i, 1395t), in such proportions as
the Secretary determines to be appropriate, of
such funds as are necessary for the costs of
carrying out the demonstration projects under this
section.
(ii) Cancer hospital.--In the case of the
project described in subsection (b)(2)(C), amounts
shall be available only as provided in any Federal
law making appropriations for the District of
Columbia.
(B) Limitation.--In conducting the demonstration
project under this section, the Secretary shall ensure
that the aggregate payments made by the Secretary do not
exceed the amount which the Secretary would have paid if
the demonstration projects under this section were not
implemented.
(2) Evaluation and report.--There are authorized to be
appropriated such sums as are necessary for the purpose of
developing and submitting the report to Congress under
subsection (c).
SEC. 4017. ORDERLY TRANSITION OF MUNICIPAL HEALTH SERVICE DEMONSTRATION
PROJECTS.
Section 9215 of the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended by section 6135 of OBRA-1989 and section 13557 of
OBRA-1993, <<NOTE: 42 USC 1395b-1 note.>> is further amended--
(1) by inserting ``(a)'' before ``The Secretary'', and
(2) by adding at the end the following: ``Subject to
subsection (c), the Secretary may further extend such
demonstration projects through December 31, 2000, but only with
respect to individuals who received at least one service during
the period beginning on January 1, 1996, and ending on the date
of the enactment of the Balanced Budget Act of 1997.
``(b) The Secretary shall work with each such demonstration project
to develop a plan, to be submitted to the Committee on Ways and Means
and the Committee on Commerce of the House
[[Page 111 STAT. 346]]
of Representatives and the Committee on Finance of the Senate by March
31, 1998, for the orderly transition of demonstration projects and the
project participants to a non-demonstration project health care delivery
system, such as through integration with a private or public health
plan, including a medicaid managed care or Medicare+Choice plan.
``(c) A demonstration project under subsection (a) which does not
develop and submit a transition plan under subsection (b) by March 31,
1998, or, if later, 6 months after the date of the enactment of the
Balanced Budget Act of 1997, shall be discontinued as of December 31,
1998. The Secretary shall provide appropriate technical assistance to
assist in the transition so that disruption of medical services to
project participants may <<NOTE: 42 USC 1395w-21 note.>> be
minimized.''.
SEC. 4018. MEDICARE ENROLLMENT DEMONSTRATION PROJECT.
(a) Demonstration Project.--
(1) Establishment.--The Secretary shall implement a
demonstration project (in this section referred to as the
``project'') for the purpose of evaluating the use of a third-
party contractor to conduct the Medicare+Choice plan enrollment
and disenrollment functions, as described in part C of title
XVIII of the Social Security Act (as added by section 4001 of
this Act), in an area.
(2) Consultation.--Before implementing the project under
this section, the Secretary shall consult with affected parties
on--
(A) the design of the project;
(B) the selection criteria for the third-party
contractor; and
(C) the establishment of performance standards, as
described in paragraph (3).
(3) Performance standards.--
(A) In general.--The Secretary shall establish
performance standards for the accuracy and timeliness of
the Medicare+Choice plan enrollment and disenrollment
functions performed by the third-party contractor.
(B) Noncompliance.--In the event that the third-
party contractor is not in substantial compliance with
the performance standards established under subparagraph
(A), such enrollment and disenrollment functions shall
be performed by the Medicare+Choice plan until the
Secretary appoints a new third-party contractor.
(b) Report to Congress.--The Secretary shall periodically report to
Congress on the progress of the project conducted pursuant to this
section.
(c) Waiver Authority.--The Secretary shall waive compliance with the
requirements of part C of title XVIII of the Social Security Act (as
amended by section 4001 of this Act) to such extent and for such period
as the Secretary determines is necessary to conduct the project.
(d) Duration.--A demonstration project under this section shall be
conducted for a 3-year period.
(e) Separate From Other Demonstration Projects.--A project
implemented by the Secretary under this section shall not be conducted
in conjunction with any other demonstration project.
[[Page 111 STAT. 347]]
SEC. 4019. <<NOTE: 42 USC 1395mm note.>> EXTENSION OF CERTAIN MEDICARE
COMMUNITY NURSING ORGANIZATION DEMONSTRATION PROJECTS.
Notwithstanding any other provision of law, demonstration projects
conducted under section 4079 of the Omnibus Budget Reconciliation Act of
1987 may be conducted for an additional period of 2 years, and the
deadline for any report required relating to the results of such
projects shall be not later than 6 months before the end of such
additional period.
CHAPTER 3--COMMISSIONS
SEC. 4021. <<NOTE: 42 USC 1395b note.>> NATIONAL BIPARTISAN COMMISSION
ON THE FUTURE OF MEDICARE.
(a) Establishment.--There is established a commission to be known as
the National Bipartisan Commission on the Future of Medicare (in this
section referred to as the ``Commission'').
(b) Duties of the Commission.--The Commission shall--
(1) review and analyze the long-term financial condition of
the medicare program under title XVIII of the Social Security
Act (42 U.S.C. 1395 et seq.);
(2) identify problems that threaten the financial integrity
of the Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund established under
that title (42 U.S.C. 1395i, 1395t), including--
(A) the financial impact on the medicare program of
the significant increase in the number of medicare
eligible individuals which will occur beginning
approximately during 2010 and lasting for approximately
25 years, and
(B) the extent to which current medicare update
indexes do not accurately reflect inflation;
(3) analyze potential solutions to the problems identified
under paragraph (2) that will ensure both the financial
integrity of the medicare program and the provision of
appropriate benefits under such program, including methods used
by other nations to respond to comparable demographic patterns
in eligibility for health care benefits for elderly and disabled
individuals and trends in employment-related health care for
retirees;
(4) make recommendations to restore the solvency of the
Federal Hospital Insurance Trust Fund and the financial
integrity of the Federal Supplementary Medical Insurance Trust
Fund;
(5) make recommendations for establishing the appropriate
financial structure of the medicare program as a whole;
(6) make recommendations for establishing the appropriate
balance of benefits covered and beneficiary contributions to the
medicare program;
(7) make recommendations for the time periods during which
the recommendations described in paragraphs (4), (5), and (6)
should be implemented;
(8) make recommendations regarding the financing of graduate
medical education (GME), including consideration of alternative
broad-based sources of funding for such education and funding
for institutions not currently eligible for such GME support
that conduct approved graduate medical residency programs, such
as children's hospitals;
(9) make recommendations on modifying age-based eligibility
to correspond to changes in age-based eligibility under
[[Page 111 STAT. 348]]
the OASDI program and on the feasibility of allowing individuals
between the age of 62 and the medicare eligibility age to buy
into the medicare program;
(10) make recommendations on the impact of chronic disease
and disability trends on future costs and quality of services
under the current benefit, financing, and delivery system
structure of the medicare program;
(11) make recommendations regarding a comprehensive approach
to preserve the program; and
(12) review and analyze such other matters as the Commission
deems appropriate.
(c) Membership.--
(1) Number and appointment.--The Commission shall be
composed of 17 members, of whom--
(A) <<NOTE: President.>> four shall be appointed by
the President;
(B) six shall be appointed by the Majority Leader of
the Senate, in consultation with the Minority Leader of
the Senate, of whom not more than 4 shall be of the same
political party;
(C) six shall be appointed by the Speaker of the
House of Representatives, in consultation with the
Minority Leader of the House of Representatives, of whom
not more than 4 shall be of the same political party;
and
(D) one, who shall serve as Chairman of the
Commission, appointed jointly by the President, Majority
Leader of the Senate, and the Speaker of the House of
Representatives.
(2) Deadline for appointment.--Members of the Commission
shall be appointed by not later than December 1, 1997.
(3) Terms of appointment.--The term of any appointment under
paragraph (1) to the Commission shall be for the life of the
Commission.
(4) Meetings.--The Commission shall meet at the call of its
Chairman or a majority of its members.
(5) Quorum.--A quorum shall consist of 8 members of the
Commission, except that 4 members may conduct a hearing under
subsection (e).
(6) Vacancies.--A vacancy on the Commission shall be filled
in the same manner in which the original appointment was made
not later than 30 days after the Commission is given notice of
the vacancy and shall not affect the power of the remaining
members to execute the duties of the Commission.
(7) Compensation.--Members of the Commission shall receive
no additional pay, allowances, or benefits by reason of their
service on the Commission.
(8) Expenses.--Each member of the Commission shall receive
travel expenses and per diem in lieu of subsistence in
accordance with sections 5702 and 5703 of title 5, United States
Code.
(d) Staff and Support Services.--
(1) Executive director.--
(A) Appointment.--The Chairman shall appoint an
executive director of the Commission.
(B) Compensation.--The executive director shall be
paid the rate of basic pay for level V of the Executive
Schedule.
[[Page 111 STAT. 349]]
(2) Staff.--With the approval of the Commission, the
executive director may appoint such personnel as the executive
director considers appropriate.
(3) Applicability of civil service laws.--The staff of the
Commission shall be appointed without regard to the provisions
of title 5, United States Code, governing appointments in the
competitive service, and shall be paid without regard to the
provisions of chapter 51 and subchapter III of chapter 53 of
such title (relating to classification and General Schedule pay
rates).
(4) Experts and consultants.--With the approval of the
Commission, the executive director may procure temporary and
intermittent services under section 3109(b) of title 5, United
States Code.
(5) Physical facilities.--The Administrator of the General
Services Administration shall locate suitable office space for
the operation of the Commission. The facilities shall serve as
the headquarters of the Commission and shall include all
necessary equipment and incidentals required for the proper
functioning of the Commission.
(e) Powers of Commission.--
(1) Hearings and other activities.--For the purpose of
carrying out its duties, the Commission may hold such hearings
and undertake such other activities as the Commission determines
to be necessary to carry out its duties.
(2) Studies by gao.--Upon the request of the Commission, the
Comptroller General shall conduct such studies or investigations
as the Commission determines to be necessary to carry out its
duties.
(3) Cost estimates by congressional budget office and office
of the chief actuary of hcfa.--
(A) The Director of the Congressional Budget Office
or the Chief Actuary of the Health Care Financing
Administration, or both, shall provide to the
Commission, upon the request of the Commission, such
cost estimates as the Commission determines to be
necessary to carry out its duties.
(B) The Commission shall reimburse the Director of
the Congressional Budget Office for expenses relating to
the employment in the office of the Director of such
additional staff as may be necessary for the Director to
comply with requests by the Commission under
subparagraph (A).
(4) Detail of federal employees.--Upon the request of the
Commission, the head of any Federal agency is authorized to
detail, without reimbursement, any of the personnel of such
agency to the Commission to assist the Commission in carrying
out its duties. Any such detail shall not interrupt or otherwise
affect the civil service status or privileges of the Federal
employee.
(5) Technical assistance.--Upon the request of the
Commission, the head of a Federal agency shall provide such
technical assistance to the Commission as the Commission
determines to be necessary to carry out its duties.
(6) Use of mails.--The Commission may use the United States
mails in the same manner and under the same conditions as
Federal agencies and shall, for purposes of the frank, be
[[Page 111 STAT. 350]]
considered a commission of Congress as described in section 3215
of title 39, United States Code.
(7) Obtaining information.--The Commission may secure
directly from any Federal agency information necessary to enable
it to carry out its duties, if the information may be disclosed
under section 552 of title 5, United States Code. Upon request
of the Chairman of the Commission, the head of such agency shall
furnish such information to the Commission.
(8) Administrative support services.--Upon the request of
the Commission, the Administrator of General Services shall
provide to the Commission on a reimbursable basis such
administrative support services as the Commission may request.
(9) Printing.--For purposes of costs relating to printing
and binding, including the cost of personnel detailed from the
Government Printing Office, the Commission shall be deemed to be
a committee of the Congress.
(f) Report.--Not later than March 1, 1999, the Commission shall
submit a report to the President and Congress which shall contain a
detailed statement of only those recommendations, findings, and
conclusions of the Commission that receive the approval of at least 11
members of the Commission.
(g) Termination.--The Commission shall terminate 30 days after the
date of submission of the report required in subsection (f).
(h) Authorization of Appropriations.--There are authorized to be
appropriated $1,500,000 to carry out this section. 60 percent of such
appropriation shall be payable from the Federal Hospital Insurance Trust
Fund, and 40 percent of such appropriation shall be payable from the
Federal Supplementary Medical Insurance Trust Fund under title XVIII of
the Social Security Act (42 U.S.C. 1395i, 1395t).
SEC. 4022. MEDICARE PAYMENT ADVISORY COMMISSION.
(a) In General.--Title XVIII is amended by inserting after section
1804 the following new section:
``medicare payment advisory <<NOTE: 42 usc 1395b-6.>> commission
``Sec. 1805. (a) Establishment.--There is hereby established the
Medicare Payment Advisory Commission (in this section referred to as the
`Commission').
``(b) Duties.--
``(1) Review of payment policies and annual reports.--The
Commission shall--
``(A) review payment policies under this title,
including the topics described in paragraph (2);
``(B) make recommendations to Congress concerning
such payment policies;
``(C) by not later than March 1 of each year
(beginning with 1998), submit a report to Congress
containing the results of such reviews and its
recommendations concerning such policies; and
``(D) by not later than June 1 of each year
(beginning with 1998), submit a report to Congress
containing an examination of issues affecting the
medicare program,
[[Page 111 STAT. 351]]
including the implications of changes in health care
delivery in the United States and in the market for
health care services on the medicare program.
``(2) Specific topics to be reviewed.--
``(A) Medicare+choice program.--Specifically, the
Commission shall review, with respect to the
Medicare+Choice program under part C, the following:
``(i) The methodology for making payment to
plans under such program, including the making of
differential payments and the distribution of
differential updates among different payment
areas.
``(ii) The mechanisms used to adjust payments
for risk and the need to adjust such mechanisms to
take into account health status of beneficiaries.
``(iii) The implications of risk selection
both among Medicare+Choice organizations and
between the Medicare+Choice option and the
original medicare fee-for-service option.
``(iv) The development and implementation of
mechanisms to assure the quality of care for those
enrolled with Medicare+Choice organizations.
``(v) The impact of the Medicare+Choice
program on access to care for medicare
beneficiaries.
``(vi) Other major issues in implementation
and further development of the Medicare+Choice
program.
``(B) Original medicare fee-for-service system.--
Specifically, the Commission shall review payment
policies under parts A and B, including--
``(i) the factors affecting expenditures for
services in different sectors, including the
process for updating hospital, skilled nursing
facility, physician, and other fees,
``(ii) payment methodologies, and
``(iii) their relationship to access and
quality of care for medicare beneficiaries.
``(C) Interaction of medicare payment policies with
health care delivery generally.--Specifically, the
Commission shall review the effect of payment policies
under this title on the delivery of health care services
other than under this title and assess the implications
of changes in health care delivery in the United States
and in the general market for health care services on
the medicare program.
``(3) Comments on certain secretarial reports.--If the
Secretary submits to Congress (or a committee of Congress) a
report that is required by law and that relates to payment
policies under this title, the Secretary shall transmit a copy
of the report to the Commission. The Commission shall review the
report and, not later than 6 months after the date of submittal
of the Secretary's report to Congress, shall submit to the
appropriate committees of Congress written comments on such
report. Such comments may include such recommendations as the
Commission deems appropriate.
``(4) Agenda and additional reviews.--The Commission shall
consult periodically with the chairmen and ranking minority
members of the appropriate committees of Congress regarding the
Commission's agenda and progress towards achieving
[[Page 111 STAT. 352]]
the agenda. The Commission may conduct additional reviews, and
submit additional reports to the appropriate committees of
Congress, from time to time on such topics relating to the
program under this title as may be requested by such chairmen
and members and as the Commission deems appropriate.
``(5) Availability of reports.--The Commission shall
transmit to the Secretary a copy of each report submitted under
this subsection and shall make such reports available to the
public.
``(6) Appropriate committees of congress.--For purposes of
this section, the term `appropriate committees of Congress'
means the Committees on Ways and Means and Commerce of the House
of Representatives and the Committee on Finance of the Senate.
``(c) Membership.--
``(1) Number and appointment.--The Commission shall be
composed of 15 members appointed by the Comptroller General.
``(2) Qualifications.--
``(A) In general.--The membership of the Commission
shall include individuals with national recognition for
their expertise in health finance and economics,
actuarial science, health facility management, health
plans and integrated delivery systems, reimbursement of
health facilities, allopathic and osteopathic
physicians, and other providers of health services, and
other related fields, who provide a mix of different
professionals, broad geographic representation, and a
balance between urban and rural representatives.
``(B) Inclusion.--The membership of the Commission
shall include (but not be limited to) physicians and
other health professionals, employers, third-party
payers, individuals skilled in the conduct and
interpretation of biomedical, health services, and
health economics research and expertise in outcomes and
effectiveness research and technology assessment. Such
membership shall also include representatives of
consumers and the elderly.
``(C) Majority nonproviders.--Individuals who are
directly involved in the provision, or management of the
delivery, of items and services covered under this title
shall not constitute a majority of the membership of the
Commission.
``(D) Ethical disclosure.--The Comptroller General
shall establish a system for public disclosure by
members of the Commission of financial and other
potential conflicts of interest relating to such
members.
``(3) Terms.--
``(A) In general.--The terms of members of the
Commission shall be for 3 years except that the
Comptroller General shall designate staggered terms for
the members first appointed.
``(B) Vacancies.--Any member appointed to fill a
vacancy occurring before the expiration of the term for
which the member's predecessor was appointed shall be
appointed only for the remainder of that term. A member
may serve after the expiration of that member's term
until a successor has taken office. A vacancy in the
Commission
[[Page 111 STAT. 353]]
shall be filled in the manner in which the original
appointment was made.
``(4) Compensation.--While serving on the business of the
Commission (including traveltime), a member of the Commission
shall be entitled to compensation at the per diem equivalent of
the rate provided for level IV of the Executive Schedule under
section 5315 of title 5, United States Code; and while so
serving away from home and the member's regular place of
business, a member may be allowed travel expenses, as authorized
by the Chairman of the Commission. Physicians serving as
personnel of the Commission may be provided a physician
comparability allowance by the Commission in the same manner as
Government physicians may be provided such an allowance by an
agency under section 5948 of title 5, United States Code, and
for such purpose subsection (i) of such section shall apply to
the Commission in the same manner as it applies to the Tennessee
Valley Authority. For purposes of pay (other than pay of members
of the Commission) and employment benefits, rights, and
privileges, all personnel of the Commission shall be treated as
if they were employees of the United States Senate.
``(5) Chairman; vice chairman.--The Comptroller General
shall designate a member of the Commission, at the time of
appointment of the member as Chairman and a member as Vice
Chairman for that term of appointment, except that in the case
of vacancy of the Chairmanship or Vice Chairmanship, the
Comptroller General may designate another member for the
remainder of that member's term.
``(6) Meetings.--The Commission shall meet at the call of
the Chairman.
``(d) Director and Staff; Experts and Consultants.--Subject to such
review as the Comptroller General deems necessary to assure the
efficient administration of the Commission, the Commission may--
``(1) employ and fix the compensation of an Executive
Director (subject to the approval of the Comptroller General)
and such other personnel as may be necessary to carry out its
duties (without regard to the provisions of title 5, United
States Code, governing appointments in the competitive service);
``(2) seek such assistance and support as may be required in
the performance of its duties from appropriate Federal
departments and agencies;
``(3) enter into contracts or make other arrangements, as
may be necessary for the conduct of the work of the Commission
(without regard to section 3709 of the Revised Statutes (41
U.S.C. 5));
``(4) make advance, progress, and other payments which
relate to the work of the Commission;
``(5) provide transportation and subsistence for persons
serving without compensation; and
``(6) prescribe such rules and regulations as it deems
necessary with respect to the internal organization and
operation of the Commission.
``(e) Powers.--
``(1) Obtaining official data.--The Commission may secure
directly from any department or agency of the United States
information necessary to enable it to carry out this
[[Page 111 STAT. 354]]
section. Upon request of the Chairman, the head of that
department or agency shall furnish that information to the
Commission on an agreed upon schedule.
``(2) Data collection.--In order to carry out its functions,
the Commission shall--
``(A) utilize existing information, both published
and unpublished, where possible, collected and assessed
either by its own staff or under other arrangements made
in accordance with this section,
``(B) carry out, or award grants or contracts for,
original research and experimentation, where existing
information is inadequate, and
``(C) adopt procedures allowing any interested party
to submit information for the Commission's use in making
reports and recommendations.
``(3) Access of gao to information.--The Comptroller General
shall have unrestricted access to all deliberations, records,
and nonproprietary data of the Commission, immediately upon
request.
``(4) Periodic audit.--The Commission shall be subject to
periodic audit by the Comptroller General.
``(f) Authorization of Appropriations.--
``(1) Request for appropriations.--The Commission shall
submit requests for appropriations in the same manner as the
Comptroller General submits requests for appropriations, but
amounts appropriated for the Commission shall be separate from
amounts appropriated for the Comptroller General.
``(2) Authorization.--There are authorized to be
appropriated such sums as may be necessary to carry out the
provisions of this section. Sixty percent of such appropriation
shall be payable from the Federal Hospital Insurance Trust Fund,
and 40 percent of such appropriation shall be payable from the
Federal Supplementary Medical Insurance Trust Fund.''.
(b) Abolition of ProPAC and PPRC.--
(1) ProPAC.--
(A) In general.--Section 1886(e) (42 U.S.C.
1395ww(e)) is amended--
(i) by striking paragraphs (2) and (6); and
(ii) in paragraph (3), by striking ``(A) The
Commission'' and all that follows through ``(B)''.
(B) Conforming amendment.--Section 1862 (42 U.S.C.
1395y) is amended by striking ``Prospective Payment
Assessment Commission'' each place it appears in
subsection (a)(1)(D) and subsection (i) and inserting
``Medicare Payment Advisory Commission''.
(2) PPRC.--
(A) In general.--Title XVIII is amended by striking
section 1845 (42 U.S.C. 1395w-1).
(B) Elimination of certain reports.--Section 1848
(42 U.S.C. 1395w-4) is amended--
(i) by striking subparagraph (F) of subsection
(d)(2),
(ii) by striking subparagraph (B) of
subsection (f)(1), and
(iii) in subsection (f)(3), by striking
``Physician Payment Review Commission,''.
[[Page 111 STAT. 355]]
(C) Conforming amendments.--Section 1848 (42 U.S.C.
1395w-4) is amended by striking ``Physician Payment
Review Commission'' and inserting ``Medicare Payment
Advisory Commission'' each place it appears in
subsections (c)(2)(B)(iii), (g)(6)(C), and (g)(7)(C).
<<NOTE: 42 USC 1395b-6 note.>> (c) Effective Date; Transition.--
(1) In general.--The Comptroller General shall first provide
for appointment of members to the Medicare Payment Advisory
Commission (in this subsection referred to as ``MedPAC'') by not
later than September 30, 1997.
(2) Transition.--As quickly as possible after the date a
majority of members of MedPAC are first appointed, the
Comptroller General, in consultation with the Prospective
Payment Assessment Commission (in this subsection referred to as
``ProPAC'') and the Physician Payment Review Commission (in this
subsection referred to as ``PPRC''), shall provide for the
termination of the ProPAC and the PPRC. As of the date of
termination of the respective Commissions, the amendments made
by paragraphs (1) and (2), respectively, of subsection (b)
become effective. The Comptroller General, to the extent
feasible, shall provide for the transfer to the MedPAC of assets
and staff of the ProPAC and the PPRC, without any loss of
benefits or seniority by virtue of such transfers. Fund balances
available to the ProPAC or the PPRC for any period shall be
available to the MedPAC for such period for like purposes.
(3) Continuing responsibility for reports.--The MedPAC shall
be responsible for the preparation and submission of reports
required by law to be submitted (and which have not been
submitted by the date of establishment of the MedPAC) by the
ProPAC and the PPRC, and, for this purpose, any reference in law
to either such Commission is deemed, after the appointment of
the MedPAC, to refer to the MedPAC.
CHAPTER 4--MEDIGAP PROTECTIONS
SEC. 4031. MEDIGAP PROTECTIONS.
(a) Guaranteeing Issue Without Preexisting Conditions for
Continuously Covered Individuals.--Section 1882(s) (42 U.S.C. 1395ss(s))
is amended--
(1) in paragraph (3), by striking ``paragraphs (1) and (2)''
and inserting ``this subsection'',
(2) by redesignating paragraph (3) as paragraph (4), and
(3) by inserting after paragraph (2) the following new
paragraph:
``(3)(A) The issuer of a medicare supplemental policy--
``(i) may not deny or condition the issuance or
effectiveness of a medicare supplemental policy described in
subparagraph (C) that is offered and is available for issuance
to new enrollees by such issuer;
``(ii) may not discriminate in the pricing of such policy,
because of health status, claims experience, receipt of health
care, or medical condition; and
``(iii) may not impose an exclusion of benefits based on a
pre-existing condition under such policy,
in the case of an individual described in subparagraph (B) who seeks to
enroll under the policy not later than 63 days after the
[[Page 111 STAT. 356]]
date of the termination of enrollment described in such subparagraph and
who submits evidence of the date of termination or disenrollment along
with the application for such medicare supplemental policy.
``(B) An individual described in this subparagraph is an individual
described in any of the following clauses:
``(i) The individual is enrolled under an employee welfare
benefit plan that provides health benefits that supplement the
benefits under this title and the plan terminates or ceases to
provide all such supplemental health benefits to the individual.
``(ii) The individual is enrolled with a Medicare+Choice
organization under a Medicare+Choice plan under part C, and
there are circumstances permitting discontinuance of the
individual's election of the plan under the first sentence of
section 1851(e)(4).
``(iii) The individual is enrolled with an eligible
organization under a contract under section 1876, a similar
organization operating under demonstration project authority,
effective for periods before April 1, 1999, with an organization
under an agreement under section 1833(a)(1)(A), or with an
organization under a policy described in subsection (t), and
such enrollment ceases under the same circumstances that would
permit discontinuance of an individual's election of coverage
under the first sentence of section 1851(e)(4) and, in the case
of a policy described in subsection (t), there is no provision
under applicable State law for the continuation or conversion of
coverage under such policy.
``(iv) The individual is enrolled under a medicare
supplemental policy under this section and such enrollment
ceases because--
``(I) of the bankruptcy or insolvency of the issuer
or because of other involuntary termination of coverage
or enrollment under such policy and there is no
provision under applicable State law for the
continuation or conversion of such coverage;
``(II) the issuer of the policy substantially
violated a material provision of the policy; or
``(III) the issuer (or an agent or other entity
acting on the issuer's behalf) materially misrepresented
the policy's provisions in marketing the policy to the
individual.
``(v) The individual--
``(I) was enrolled under a medicare supplemental
policy under this section,
``(II) subsequently terminates such enrollment and
enrolls, for the first time, with any Medicare+Choice
organization under a Medicare+Choice plan under part C,
any eligible organization under a contract under section
1876, any similar organization operating under
demonstration project authority, or any policy described
in subsection (t), and
``(III) the subsequent enrollment under subclause
(II) is terminated by the enrollee during any period
within the first 12 months of such enrollment (during
which the enrollee is permitted to terminate such
subsequent enrollment under section 1851(e)).
[[Page 111 STAT. 357]]
``(vi) The individual, upon first becoming eligible for
benefits under part A at age 65, enrolls in a Medicare+Choice
plan under part C, and disenrolls from such plan by not later
than 12 months after the effective date of such enrollment.
``(C)(i) Subject to clauses (ii) and (iii), a medicare supplemental
policy described in this subparagraph is a medicare supplemental policy
which has a benefit package classified as `A', `B', `C', or `F' under
the standards established under subsection (p)(2).
``(ii) Only for purposes of an individual described in subparagraph
(B)(v), a medicare supplemental policy described in this subparagraph is
the same medicare supplemental policy referred to in such subparagraph
in which the individual was most recently previously enrolled, if
available from the same issuer, or, if not so available, a policy
described in clause (i).
``(iii) Only for purposes of an individual described in subparagraph
(B)(vi), a medicare supplemental policy described in this subparagraph
shall include any medicare supplemental policy.
``(iv) For purposes of applying this paragraph in the case of a
State that provides for offering of benefit packages other than under
the classification referred to in clause (i), the references to benefit
packages in such clause are deemed references to comparable benefit
packages offered in such State.
``(D) At the time of an event described in subparagraph (B) because
of which an individual ceases enrollment or loses coverage or benefits
under a contract or agreement, policy, or plan, the organization that
offers the contract or agreement, the insurer offering the policy, or
the administrator of the plan, respectively, shall notify the individual
of the rights of the individual under this paragraph, and obligations of
issuers of medicare supplemental policies, under subparagraph (A).''.
(b) Limitation on Imposition of Preexisting Condition Exclusion
During Initial Open Enrollment Period.--Section 1882(s)(2) (42 U.S.C.
1395ss(s)(2)) is amended--
(1) in subparagraph (B), by striking ``subparagraph (C)''
and inserting ``subparagraphs (C) and (D)'', and
(2) by adding at the end the following new subparagraph:
``(D) In the case of a policy issued during the 6-month period
described in subparagraph (A) to an individual who is 65 years of age or
older as of the date of issuance and who as of the date of the
application for enrollment has a continuous period of creditable
coverage (as defined in 2701(c) of the Public Health Service Act) of--
``(i) at least 6 months, the policy may not exclude benefits
based on a pre-existing condition; or
``(ii) less than 6 months, if the policy excludes benefits
based on a preexisting condition, the policy shall reduce the
period of any preexisting condition exclusion by the aggregate
of the periods of creditable coverage (if any, as so defined)
applicable to the individual as of the enrollment date.
The Secretary shall specify the manner of the reduction under clause
(ii), based upon the rules used by the Secretary in carrying out section
2701(a)(3) of such Act.''.
(c) Conforming Amendment.--Section 1882(d)(3)(A)(vi)(III) (42 U.S.C.
1395ss(d)(2)(A)(vi)(III)) is amended by inserting ``, a policy described
in clause (v),'' after ``Medicare supplemental policy''.
<<NOTE: 42 USC 1395ss note.>> (d) Effective Dates.--
[[Page 111 STAT. 358]]
(1) Guaranteed issue.--The amendment made by subsection (a)
shall take effect on July 1, 1998.
(2) Limit on preexisting condition exclusions.--The
amendment made by subsection (b) shall apply to policies issued
on or after July 1, 1998.
(3) Conforming amendment.--The amendment made by subsection
(c) shall be effective as if included in the enactment of the
Health Insurance Portability and Accountability Act of 1996.
<<NOTE: 42 USC 1395ss note.>> (e) Transition Provisions.--
(1) In general.--If the Secretary of Health and Human
Services identifies a State as requiring a change to its
statutes or regulations to conform its regulatory program to the
changes made by this section, the State regulatory program shall
not be considered to be out of compliance with the requirements
of section 1882 of the Social Security Act due solely to failure
to make such change until the date specified in paragraph (4).
<<NOTE: Regulations.>> (2) NAIC standards.--If, within 9
months after the date of the enactment of this Act, the National
Association of Insurance Commissioners (in this subsection
referred to as the ``NAIC'') modifies its NAIC Model Regulation
relating to section 1882 of the Social Security Act (referred to
in such section as the 1991 NAIC Model Regulation, as modified
pursuant to section 171(m)(2) of the Social Security Act
Amendments of 1994 (Public Law 103-432) and as modified pursuant
to section 1882(d)(3)(A)(vi)(IV) of the Social Security Act, as
added by section 271(a) of the Health Insurance Portability and
Accountability Act of 1996 (Public Law 104-191) to conform to
the amendments made by this section, such revised regulation
incorporating the modifications shall be considered to be the
applicable NAIC model regulation (including the revised NAIC
model regulation and the 1991 NAIC Model Regulation) for the
purposes of such section.
(3) Secretary standards.--If the NAIC does not make the
modifications described in paragraph (2) within the period
specified in such paragraph, the Secretary of Health and Human
Services shall make the modifications described in such
paragraph and such revised regulation incorporating the
modifications shall be considered to be the appropriate
Regulation for the purposes of such section.
(4) Date specified.--
(A) In general.--Subject to subparagraph (B), the
date specified in this paragraph for a State is the
earlier of--
(i) the date the State changes its statutes or
regulations to conform its regulatory program to
the changes made by this section, or
(ii) 1 year after the date the NAIC or the
Secretary first makes the modifications under
paragraph (2) or (3), respectively.
(B) Additional legislative action required.--In the
case of a State which the Secretary identifies as--
(i) requiring State legislation (other than
legislation appropriating funds) to conform its
regulatory program to the changes made in this
section, but
[[Page 111 STAT. 359]]
(ii) having a legislature which is not
scheduled to meet in 1999 in a legislative session
in which such legislation may be considered,
the date specified in this paragraph is the first day of
the first calendar quarter beginning after the close of
the first legislative session of the State legislature
that begins on or after July 1, 1999. For purposes of
the previous sentence, in the case of a State that has a
2-year legislative session, each year of such session
shall be deemed to be a separate regular session of the
State legislature.
<<NOTE: 42 USC 1395ss note.>> (f) Conforming Benefits to Changes in
Terminology for Hospital Outpatient Department Cost Sharing.--For
purposes of apply section 1882 of the Social Security Act (42 U.S.C.
1395ss) and regulations referred to in subsection (e), copayment amounts
provided under section 1833(t)(5) of such Act with respect to hospital
outpatient department services shall be treated under medicare
supplemental policies in the same manner as coinsurance with respect to
such services.
SEC. 4032. ADDITION OF HIGH DEDUCTIBLE MEDIGAP POLICIES.
(a) In General.--Section 1882(p) (42 U.S.C. 1395ss(p)) is amended--
(1) in paragraph (2)(C), by inserting ``plus the 2 plans
described in paragraph (11)(A)'' after ``exceed 10''; and
(2) by adding at the end the following:
``(11)(A) For purposes of paragraph (2), the benefit packages
described in this subparagraph are as follows:
``(i) The benefit package classified as `F' under the
standards established by such paragraph, except that it has a
high deductible feature.
``(ii) The benefit package classified as `J' under the
standards established by such paragraph, except that it has a
high deductible feature.
``(B) For purposes of subparagraph (A), a high deductible feature is
one which--
``(i) requires the beneficiary of the policy to pay annual
out-of-pocket expenses (other than premiums) in the amount
specified in subparagraph (C) before the policy begins payment
of benefits, and
``(ii) covers 100 percent of covered out-of-pocket expenses
once such deductible has been satisfied in a year.
``(C) The amount specified in this subparagraph--
``(i) for 1998 and 1999 is $1,500, and
``(ii) for a subsequent year, is the amount specified in
this subparagraph for the previous year increased by the
percentage increase in the Consumer Price Index for all urban
consumers (all items; U.S. city average) for the 12-month period
ending with August of the preceding year.
If any amount determined under clause (ii) is not a multiple of $10, it
shall be rounded to the nearest multiple of $10.''.
<<NOTE: 42 USC 1395ss note.>> (b) Effective Date.--
(1) In general.--The amendments made by subsection (a) shall
take effect the date of the enactment of this Act.
(2) Transition.--The provisions of section 4031(e) shall
apply with respect to this section in the same manner as they
apply to section 4031.
[[Page 111 STAT. 360]]
CHAPTER 5--TAX TREATMENT OF HOSPITALS PARTICIPATING IN PROVIDER-
SPONSORED ORGANIZATIONS
SEC. 4041. TAX TREATMENT OF HOSPITALS WHICH PARTICIPATE IN PROVIDER-
SPONSORED ORGANIZATIONS.
(a) In General.--Section 501 of the Internal Revenue Code of
1986 <<NOTE: 26 USC 501.>> (relating to exemption from tax on
corporations, certain trusts, etc.) is amended by redesignating
subsection (o) as subsection (p) and by inserting after subsection (n)
the following new subsection:
``(o) Treatment of Hospitals Participating in Provider-Sponsored
Organizations.--An organization shall not fail to be treated as
organized and operated exclusively for a charitable purpose for purposes
of subsection (c)(3) solely because a hospital which is owned and
operated by such organization participates in a provider-sponsored
organization (as defined in section 1853(e) of the Social Security Act),
whether or not the provider-sponsored organization is exempt from tax.
For purposes of subsection (c)(3), any person with a material financial
interest in such a provider-sponsored organization shall be treated as a
private shareholder or individual with respect to the hospital.''
<<NOTE: 26 USC 501 note.>> (b) Effective Date.--The amendment made
by subsection (a) shall take effect on the date of the enactment of this
Act.
Subtitle B--Prevention Initiatives
SEC. 4101. SCREENING MAMMOGRAPHY.
(a) Providing Annual Screening Mammography for Women Over Age 39.--
Section 1834(c)(2)(A) (42 U.S.C. 1395m(c)(2)(A)) is amended--
(1) in clause (iii), to read as follows:
``(iii) In the case of a woman over 39 years
of age, payment may not be made under this part
for screening mammography performed within 11
months following the month in which a previous
screening mammography was performed.''; and
(2) by striking clauses (iv) and (v).
(b) Waiver of Deductible.--The first sentence of section 1833(b) (42
U.S.C. 1395l(b)) is amended--
(1) by striking ``and'' before ``(4)'', and
(2) by inserting before the period at the end the following:
``, and (5) such deductible shall not apply with respect to
screening mammography (as described in section 1861(jj))''.
(c) Conforming Amendment.--Section 1834(c)(1)(C) (42 U.S.C.
1395m(c)(1)(C)) is amended by striking ``, subject to the deductible
established under section 1833(b),''.
<<NOTE: 42 USC 1395l note.>> (d) Effective Date.--The amendments
made by this section shall apply to items and services furnished on or
after January 1, 1998.
SEC. 4102. SCREENING PAP SMEAR AND PELVIC EXAMS.
(a) Coverage of Pelvic Exam; Increasing Frequency of Coverage of Pap
Smear.--Section 1861(nn) (42 U.S.C. 1395x(nn)) is amended--
(1) in the heading, by striking ``Smear'' and inserting
``Smear; Screening Pelvic Exam'';
[[Page 111 STAT. 361]]
(2) by inserting ``or vaginal'' after ``cervical'' each
place it appears;
(3) by striking ``(nn)'' and inserting ``(nn)(1)'';
(4) by striking ``3 years'' and all that follows and
inserting ``3 years, or during the preceding year in the case of
a woman described in paragraph (3).''; and
(5) by adding at the end the following new paragraphs:
``(2) The term `screening pelvic exam' means a pelvic examination
provided to a woman if the woman involved has not had such an
examination during the preceding 3 years, or during the preceding year
in the case of a woman described in paragraph (3), and includes a
clinical breast examination.
``(3) A woman described in this paragraph is a woman who--
``(A) is of childbearing age and has had a test described in
this subsection during any of the preceding 3 years that
indicated the presence of cervical or vaginal cancer or other
abnormality; or
``(B) is at high risk of developing cervical or vaginal
cancer (as determined pursuant to factors identified by the
Secretary).''.
(b) Waiver of Deductible.--The first sentence of section 1833(b) (42
U.S.C. 1395l(b)), as amended by section 4101(b), is amended--
(1) by striking ``and'' before ``(5)'', and
(2) by inserting before the period at the end the following:
``, and (6) such deductible shall not apply with respect to
screening pap smear and screening pelvic exam (as described in
section 1861(nn))''.
(c) Conforming Amendments.--Sections 1861(s)(14) and 1862(a)(1)(F)
(42 U.S.C. 1395x(s)(14), 1395y(a)(1)(F)) are each amended by inserting
``and screening pelvic exam'' after ``screening pap smear''.
(d) Payment Under Physician Fee Schedule.--Section 1848(j)(3) (42
U.S.C. 1395w-4(j)(3)) is amended by striking ``and (4)'' and inserting
``(4) and (14) (with respect to services described in section
1861(nn)(2))''.
<<NOTE: 42 USC 1395l note.>> (e) Effective Date.--The amendments
made by this section shall apply to items and services furnished on or
after January 1, 1998.
SEC. 4103. PROSTATE CANCER SCREENING TESTS.
(a) Coverage.--Section 1861 (42 U.S.C. 1395x) is amended--
(1) in subsection (s)(2)--
(A) by striking ``and'' at the end of subparagraphs
(N) and (O), and
(B) by inserting after subparagraph (O) the
following new subparagraph:
``(P) prostate cancer screening tests (as defined in
subsection (oo)); and''; and
(2) by adding at the end the following new subsection:
``Prostate Cancer Screening Tests
``(oo)(1) The term `prostate cancer screening test' means a test
that consists of any (or all) of the procedures described in paragraph
(2) provided for the purpose of early detection of prostate cancer to a
man over 50 years of age who has not had such a test during the
preceding year.
[[Page 111 STAT. 362]]
``(2) The procedures described in this paragraph are as follows:
``(A) A digital rectal examination.
``(B) A prostate-specific antigen blood test.
``(C) For years beginning after 2002, such other procedures
as the Secretary finds appropriate for the purpose of early
detection of prostate cancer, taking into account changes in
technology and standards of medical practice, availability,
effectiveness, costs, and such other factors as the Secretary
considers appropriate.''.
(b) Payment for Prostate-specific Antigen Blood Test Under Clinical
Diagnostic Laboratory Test Fee Schedules.--Section 1833(h)(1)(A) (42
U.S.C. 1395l(h)(1)(A)) is amended by inserting after ``laboratory
tests'' the following: ``(including prostate cancer screening tests
under section 1861(oo) consisting of prostate-specific antigen blood
tests)''.
(c) Conforming Amendment.--Section 1862(a) (42 U.S.C. 1395y(a)) is
amended--
(1) in paragraph (1)--
(A) in subparagraph (E), by striking ``and'' at the
end,
(B) in subparagraph (F), by striking the semicolon
at the end and inserting ``, and'', and
(C) by adding at the end the following new
subparagraph:
``(G) in the case of prostate cancer screening tests (as
defined in section 1861(oo)), which are performed more
frequently than is covered under such section;''; and
(2) in paragraph (7), by striking ``paragraph (1)(B) or
under paragraph (1)(F)'' and inserting ``subparagraphs (B), (F),
or (G) of paragraph (1)''.
(d) Payment Under Physician Fee Schedule.--Section 1848(j)(3) (42
U.S.C. 1395w-4(j)(3)), as amended by section 4102, is amended by
inserting ``, (2)(P) (with respect to services described in
subparagraphs (A) and (C) of section 1861(oo)(2),'' after ``(2)(G)''
<<NOTE: 42 USC 1395l note.>> (e) Effective Date.--The amendments
made by this section shall apply to items and services furnished on or
after January 1, 2000.
SEC. 4104. COVERAGE OF COLORECTAL SCREENING.
(a) Coverage.--
(1) In general.--Section 1861 (42 U.S.C. 1395x), as amended
by section 4103(a), is amended--
(A) in subsection (s)(2)--
(i) by striking ``and'' at the end of
subparagraph (P);
(ii) by adding ``and'' at the end of
subparagraph (Q); and
(iii) by adding at the end the following new
subparagraph:
``(R) colorectal cancer screening tests (as defined in
subsection (pp)); and''; and
(B) by adding at the end the following new
subsection:
``Colorectal Cancer Screening Tests
``(pp)(1) The term `colorectal cancer screening test' means any of
the following procedures furnished to an individual for the purpose of
early detection of colorectal cancer:
``(A) Screening fecal-occult blood test.
[[Page 111 STAT. 363]]
``(B) Screening flexible sigmoidoscopy.
``(C) In the case of an individual at high risk for
colorectal cancer, screening colonoscopy.
``(D) Such other tests or procedures, and modifications to
tests and procedures under this subsection, with such frequency
and payment limits, as the Secretary determines appropriate, in
consultation with appropriate organizations.
``(2) In paragraph (1)(C), an `individual at high risk for
colorectal cancer' is an individual who, because of family history,
prior experience of cancer or precursor neoplastic polyps, a history of
chronic digestive disease condition (including inflammatory bowel
disease, Crohn's Disease, or ulcerative colitis), the presence of any
appropriate recognized gene markers for colorectal cancer, or other
predisposing factors, faces a high risk for colorectal cancer.''.
<<NOTE: Federal Register, publication. 42 USC 1395x note.>>
(2) Deadline for publication of determination on coverage of
screening barium enema.--Not later than the earlier of the date
that is January 1, 1998, or 90 days after the date of the
enactment of this Act, the Secretary of Health and Human
Services shall publish notice in the Federal Register with
respect to the determination under paragraph (1)(D) of section
1861(pp) of the Social Security Act (42 U.S.C. 1395x(pp)), as
added by paragraph (1), on the coverage of a screening barium
enema as a colorectal cancer screening test under such section.
(b) Frequency Limits and Payment.--
(1) In general.--Section 1834 (42 U.S.C. 1395m) is amended
by inserting after subsection (c) the following new subsection:
``(d) Frequency Limits and Payment for Colorectal Cancer Screening
Tests.--
``(1) Screening fecal-occult blood tests.--
``(A) Payment amount.--The payment amount for
colorectal cancer screening tests consisting of
screening fecal-occult blood tests is equal to the
payment amount established for diagnostic fecal-occult
blood tests under section 1833(h).
``(B) Frequency limit.--No payment may be made under
this part for a colorectal cancer screening test
consisting of a screening fecal-occult blood test--
``(i) if the individual is under 50 years of
age; or
``(ii) if the test is performed within the 11
months after a previous screening fecal-occult
blood test.
``(2) Screening flexible sigmoidoscopies.--
``(A) Fee schedule.--With respect to colorectal
cancer screening tests consisting of screening flexible
sigmoidoscopies, payment under section 1848 shall be
consistent with payment under such section for similar
or related services.
``(B) Payment limit.--In the case of screening
flexible sigmoidoscopy services, payment under this part
shall not exceed such amount as the Secretary specifies,
based upon the rates recognized for diagnostic flexible
sigmoidoscopy services.
``(C) Facility payment limit.--
``(i) In general.--Notwithstanding subsections
(i)(2)(A) and (t) of section 1833, in the case of
screening
[[Page 111 STAT. 364]]
flexible sigmoidoscopy services furnished on or
after January 1, 1999, that--
``(I) in accordance with
regulations, may be performed in an
ambulatory surgical center and for which
the Secretary permits ambulatory
surgical center payments under this
part, and
``(II) are performed in an
ambulatory surgical center or hospital
outpatient department,
payment under this part shall be based on the
lesser of the amount under the fee schedule that
would apply to such services if they were
performed in a hospital outpatient department in
an area or the amount under the fee schedule that
would apply to such services if they were
performed in an ambulatory surgical center in the
same area.
``(ii) Limitation on deductible and
coinsurance.--Notwithstanding any other provision
of this title, in the case of a beneficiary who
receives the services described in clause (i)--
``(I) in computing the amount of any
applicable deductible or copayment, the
computation of such deductible or
coinsurance shall be based upon the fee
schedule under which payment is made for
the services, and
``(II) the amount of such
coinsurance is equal to 25 percent of
the payment amount under the fee
schedule described in subclause (I).
``(D) Special rule for detected lesions.--If during
the course of such screening flexible sigmoidoscopy, a
lesion or growth is detected which results in a biopsy
or removal of the lesion or growth, payment under this
part shall not be made for the screening flexible
sigmoidoscopy but shall be made for the procedure
classified as a flexible sigmoidoscopy with such biopsy
or removal.
``(E) Frequency limit.--No payment may be made under
this part for a colorectal cancer screening test
consisting of a screening flexible sigmoidoscopy--
``(i) if the individual is under 50 years of
age; or
``(ii) if the procedure is performed within
the 47 months after a previous screening flexible
sigmoidoscopy.
``(3) Screening colonoscopy for individuals at high risk for
colorectal cancer.--
``(A) Fee schedule.--With respect to colorectal
cancer screening test consisting of a screening
colonoscopy for individuals at high risk for colorectal
cancer (as defined in section 1861(pp)(2)), payment
under section 1848 shall be consistent with payment
amounts under such section for similar or related
services.
``(B) Payment limit.--In the case of screening
colonoscopy services, payment under this part shall not
exceed such amount as the Secretary specifies, based
upon the rates recognized for diagnostic colonoscopy
services.
``(C) Facility payment limit.--
``(i) In general.--Notwithstanding subsections
(i)(2)(A) and (t) of section 1833, in the case of
screening
[[Page 111 STAT. 365]]
colonoscopy services furnished on or after January
1, 1999, that are performed in an ambulatory
surgical center or a hospital outpatient
department, payment under this part shall be based
on the lesser of the amount under the fee schedule
that would apply to such services if they were
performed in a hospital outpatient department in
an area or the amount under the fee schedule that
would apply to such services if they were
performed in an ambulatory surgical center in the
same area.
``(ii) Limitation on deductible and
coinsurance.--Notwithstanding any other provision
of this title, in the case of a beneficiary who
receives the services described in clause (i)--
``(I) in computing the amount of any
applicable deductible or coinsurance,
the computation of such deductible or
coinsurance shall be based upon the fee
schedule under which payment is made for
the services, and
``(II) the amount of such
coinsurance is equal to 25 percent of
the payment amount under the fee
schedule described in subclause (I).
``(D) Special rule for detected lesions.--If during
the course of such screening colonoscopy, a lesion or
growth is detected which results in a biopsy or removal
of the lesion or growth, payment under this part shall
not be made for the screening colonoscopy but shall be
made for the procedure classified as a colonoscopy with
such biopsy or removal.
``(E) Frequency limit.--No payment may be made under
this part for a colorectal cancer screening test
consisting of a screening colonoscopy for individuals at
high risk for colorectal cancer if the procedure is
performed within the 23 months after a previous
screening colonoscopy.''.
(c) Conforming Amendments.--(1) Paragraphs (1)(D) and (2)(D) of
section 1833(a) (42 U.S.C. 1395l(a)) are each amended by inserting ``or
section 1834(d)(1)'' after ``subsection (h)(1)''.
(2) Section 1833(h)(1)(A) (42 U.S.C. 1395l(h)(1)(A)) is amended by
striking ``The Secretary'' and inserting ``Subject to section
1834(d)(1), the Secretary''.
(3) Section 1862(a) (42 U.S.C. 1395y(a)), as amended by section
4103(c), is amended--
(A) in paragraph (1)--
(i) in subparagraph (F), by striking ``and'' at the
end,
(ii) in subparagraph (G), by striking the semicolon
at the end and inserting ``, and'', and
(iii) by adding at the end the following new
subparagraph:
``(H) in the case of colorectal cancer screening tests,
which are performed more frequently than is covered under
section 1834(d);''; and
(B) in paragraph (7), by striking ``or (G)'' and inserting
``(G), or (H)''.
(d) Payment Under Physician Fee Schedule.--Section 1848(j)(3) (42
U.S.C. 1395w-4(j)(3)), as amended by sections 4102 and 4103, is amended
by inserting ``(2)(R) (with respect to services
[[Page 111 STAT. 366]]
described in subparagraphs (B) , (C), and (D) of section 1861(pp)(1)),''
before ``(3)''.
<<NOTE: 42 USC 1395l note.>> (e) Effective Date.--The amendments
made by this section shall apply to items and services furnished on or
after January 1, 1998.
SEC. 4105. DIABETES SELF-MANAGEMENT BENEFITS.
(a) Coverage of Diabetes Outpatient Self-management Training
Services.--
(1) In general.--Section 1861 (42 U.S.C. 1395x), as amended
by sections 4103(a) and 4104(a), is amended--
(A) in subsection (s)(2)--
(i) by striking ``and'' at the end of
subparagraph (Q);
(ii) by adding ``and'' at the end of
subparagraph (R); and
(iii) by adding at the end the following new
subparagraph:
``(S) diabetes outpatient self-management training services
(as defined in subsection (qq)); and''; and
(B) by adding at the end the following new
subsection:
``Diabetes Outpatient Self-Management Training Services
``(qq)(1) The term `diabetes outpatient self-management training
services' means educational and training services furnished (at such
times as the Secretary determines appropriate) to an individual with
diabetes by a certified provider (as described in paragraph (2)(A)) in
an outpatient setting by an individual or entity who meets the quality
standards described in paragraph (2)(B), but only if the physician who
is managing the individual's diabetic condition certifies that such
services are needed under a comprehensive plan of care related to the
individual's diabetic condition to ensure therapy compliance or to
provide the individual with necessary skills and knowledge (including
skills related to the self-administration of injectable drugs) to
participate in the management of the individual's condition.
``(2) In paragraph (1)--
``(A) a `certified provider' is a physician, or other
individual or entity designated by the Secretary, that, in
addition to providing diabetes outpatient self-management
training services, provides other items or services for which
payment may be made under this title; and
``(B) a physician, or such other individual or entity, meets
the quality standards described in this paragraph if the
physician, or individual or entity, meets quality standards
established by the Secretary, except that the physician or other
individual or entity shall be deemed to have met such standards
if the physician or other individual or entity meets applicable
standards originally established by the National Diabetes
Advisory Board and subsequently revised by organizations who
participated in the establishment of standards by such Board, or
is recognized by an organization that represents individuals
(including individuals under this title) with diabetes as
meeting standards for furnishing the services.''.
(2) Payment Under Physician Fee Schedule.--Section
1848(j)(3) (42 U.S.C. 1395w-4(j)(3)) as amended in sections
[[Page 111 STAT. 367]]
4102, 4103, and 4104, is amended by inserting ``(2)(S),'' before
``(3),''.
(3) Consultation <<NOTE: 42 USC 1395w-4 note.>> with
organizations in establishing payment amounts for services
provided by physicians.--In establishing payment amounts under
section 1848 of the Social Security Act for physicians' services
consisting of diabetes outpatient self-management training
services, the Secretary of Health and Human Services shall
consult with appropriate organizations, including such
organizations representing individuals or medicare beneficiaries
with diabetes.
(b) Blood-testing Strips for Individuals With Diabetes.--
(1) Including strips and monitors as durable medical
equipment.--The first sentence of section 1861(n) (42 U.S.C.
1395x(n)) is amended by inserting before the semicolon the
following: ``, and includes blood-testing strips and blood
glucose monitors for individuals with diabetes without regard to
whether the individual has Type I or Type II diabetes or to the
individual's use of insulin (as determined under standards
established by the Secretary in consultation with the
appropriate organizations)''.
(2) 10 percent reduction in payments for testing strips.--
Section 1834(a)(2)(B)(iv) (42 U.S.C. 1395m(a)(2)(B)(iv)) is
amended by adding before the period the following: ``(reduced by
10 percent, in the case of a blood glucose testing strip
furnished after 1997 for an individual with diabetes)''.
<<NOTE: 42 USC 1395x note.>> (c) Establishment of Outcome Measures
for Beneficiaries With Diabetes.--
(1) In general.--The Secretary of Health and Human Services,
in consultation with appropriate organizations, shall establish
outcome measures, including glysolated hemoglobin (past 90-day
average blood sugar levels), for purposes of evaluating the
improvement of the health status of medicare beneficiaries with
diabetes mellitus.
(2) Recommendations for modifications to screening
benefits.--Taking into account information on the health status
of medicare beneficiaries with diabetes mellitus as measured
under the outcome measures established under paragraph (1), the
Secretary shall from time to time submit recommendations to
Congress regarding modifications to the coverage of services for
such beneficiaries under the medicare program.
<<NOTE: 42 USC 1395m note.>> (d) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to items and
services furnished on or after July 1, 1998.
(2) Testing strips.--The amendment made by subsection (b)(2)
shall apply with respect to blood glucose testing strips
furnished on or after January 1, 1998.
SEC. 4106. STANDARDIZATION OF MEDICARE COVERAGE OF BONE MASS
MEASUREMENTS.
(a) In General.--Section 1861 (42 U.S.C. 1395x), as amended by
sections 4103(a), 4104(a), and 4105(a), is amended--
(1) in subsection (s)--
(A) in paragraph (12)(C), by striking ``and'' at the
end,
(B) by striking the period at the end of paragraph
(14) and inserting ``; and'',
[[Page 111 STAT. 368]]
(C) by redesignating paragraphs (15) and (16) as
paragraphs (16) and (17), respectively, and
(D) by inserting after paragraph (14) the following
new paragraph:
``(15) bone mass measurement (as defined in subsection
(rr)).''; and
(2) by inserting after subsection (qq) the following new
subsection:
``Bone Mass Measurement
``(rr)(1) The term `bone mass measurement' means a radiologic or
radioisotopic procedure or other procedure approved by the Food and Drug
Administration performed on a qualified individual (as defined in
paragraph (2)) for the purpose of identifying bone mass or detecting
bone loss or determining bone quality, and includes a physician's
interpretation of the results of the procedure.
<<NOTE: Regulations.>> ``(2) For purposes of this subsection, the
term `qualified individual' means an individual who is (in accordance
with regulations prescribed by the Secretary)--
``(A) an estrogen-deficient woman at clinical risk for
osteoporosis;
``(B) an individual with vertebral abnormalities;
``(C) an individual receiving long-term glucocorticoid
steroid therapy;
``(D) an individual with primary hyperparathyroidism; or
``(E) an individual being monitored to assess the response
to or efficacy of an approved osteoporosis drug therapy.
``(3) The Secretary shall establish such standards regarding the
frequency with which a qualified individual shall be eligible to be
provided benefits for bone mass measurement under this title.''.
(b) Payment under Physician Fee Schedule.--Section 1848(j)(3) (42
U.S.C. 1395w-4(j)(3)), as amended by sections 4102, 4103, 4104 and 4105,
is amended--
(1) by striking ``(4) and (14)'' and inserting ``(4), (14)''
and
(2) by inserting ``and (15)'' after ``1861(nn)(2))''.
(c) Conforming Amendments.--Sections 1864(a), 1902(a)(9)(C), and
1915(a)(1)(B)(ii)(I) (42 U.S.C. 1395aa(a), 1396a(a)(9)(C), and
1396n(a)(1)(B)(ii)(I)) are amended by striking ``paragraphs (15) and
(16)'' each place it appears and inserting ``paragraphs (16) and (17)''.
<<NOTE: 42 USC 1395x note.>> (d) Effective Date.--The amendments
made by this section shall apply to bone mass measurements performed on
or after July 1, 1998.
<<NOTE: 42 USC 1395x note.>> SEC. 4107. VACCINES OUTREACH EXPANSION.
(a) Extension of Influenza and Pneumococcal Vaccination Campaign.--
In order to increase utilization of pneumococcal and influenza vaccines
in medicare beneficiaries, the Influenza and Pneumococcal Vaccination
Campaign carried out by the Health Care Financing Administration in
conjunction with the Centers for Disease Control and Prevention and the
National Coalition for Adult Immunization, is extended until the end of
fiscal year 2002.
(b) Authorization of Appropriation.--There are hereby authorized to
be appropriated for each of fiscal years 1998 through 2002, $8,000,000
for the Campaign described in subsection (a).
[[Page 111 STAT. 369]]
Of the amount so authorized to be appropriated in each fiscal year, 60
percent of the amount so appropriated shall be payable from the Federal
Hospital Insurance Trust Fund, and 40 percent shall be payable from the
Federal Supplementary Medical Insurance Trust Fund.
<<NOTE: 42 USC 1395x note.>> SEC. 4108. STUDY ON PREVENTIVE AND ENHANCED
BENEFITS.
(a) Study.--The Secretary of Health and Human Services shall request
the National Academy of Sciences, and as appropriate in conjunction with
the United States Preventive Services Task Force, to analyze the
expansion or modification of preventive or other benefits provided to
medicare beneficiaries under title XVIII of the Social Security Act. The
analysis shall consider both the short term and long term benefits, and
costs to the medicare program, of such expansion or modification.
(b) Report.--
(1) Initial report.--Not later than 2 years after the date
of the enactment of this Act, the Secretary shall submit a
report on the findings of the analysis conducted under
subsection (a) to the Committee on Ways and Means and the
Committee on Commerce of the House of Representatives and the
Committee on Finance of the Senate.
(2) Contents.--Such report shall include specific findings
with respect to coverage of at least the following benefits:
(A) Nutrition therapy services, including parenteral
and enteral nutrition and including the provision of
such services by a registered dietitian.
(B) Skin cancer screening.
(C) Medically necessary dental care.
(D) Routine patient care costs for beneficiaries
enrolled in approved clinical trial programs.
(E) Elimination of time limitation for coverage of
immunosuppressive drugs for transplant patients.
(3) Funding.--From funds appropriated to the Department of
Health and Human Services for fiscal years 1998 and 1999, the
Secretary shall provide for such funding as the Secretary
determines necessary for the conduct of the study by the
National Academy of Sciences under this section.
Subtitle C--Rural Initiatives
SEC. 4201. MEDICARE RURAL HOSPITAL FLEXIBILITY PROGRAM.
(a) Medicare Rural Hospital Flexibility Program.--Section 1820 (42
U.S.C. 1395i-4) is amended to read as follows:
``medicare rural hospital flexibility program
``Sec. 1820. (a) Establishment.--Any State that submits an
application in accordance with subsection (b) may establish a medicare
rural hospital flexibility program described in subsection (c).
``(b) Application.--A State may establish a medicare rural hospital
flexibility program described in subsection (c) if the State submits to
the Secretary at such time and in such form as the Secretary may require
an application containing--
``(1) assurances that the State--
``(A) has developed, or is in the process of
developing, a State rural health care plan that--
[[Page 111 STAT. 370]]
``(i) provides for the creation of 1 or more
rural health networks (as defined in subsection
(d)) in the State;
``(ii) promotes regionalization of rural
health services in the State; and
``(iii) improves access to hospital and other
health services for rural residents of the State;
and
``(B) has developed the rural health care plan
described in subparagraph (A) in consultation with the
hospital association of the State, rural hospitals
located in the State, and the State Office of Rural
Health (or, in the case of a State in the process of
developing such plan, that assures the Secretary that
the State will consult with its State hospital
association, rural hospitals located in the State, and
the State Office of Rural Health in developing such
plan);
``(2) assurances that the State has designated (consistent
with the rural health care plan described in paragraph (1)(A)),
or is in the process of so designating, rural nonprofit or
public hospitals or facilities located in the State as critical
access hospitals; and
``(3) such other information and assurances as the Secretary
may require.
``(c) Medicare Rural Hospital Flexibility Program Described.--
``(1) In general.--A State that has submitted an application
in accordance with subsection (b), may establish a medicare
rural hospital flexibility program that provides that--
``(A) the State shall develop at least 1 rural
health network (as defined in subsection (d)) in the
State; and
``(B) at least 1 facility in the State shall be
designated as a critical access hospital in accordance
with paragraph (2).
``(2) State designation of facilities.--
``(A) In general.--A State may designate 1 or more
facilities as a critical access hospital in accordance
with subparagraph (B).
``(B) Criteria for designation as critical access
hospital.--A State may designate a facility as a
critical access hospital if the facility--
``(i) is a nonprofit or public hospital and is
located in a county (or equivalent unit of local
government) in a rural area (as defined in section
1886(d)(2)(D)) that--
``(I) is located more than a 35-mile
drive (or, in the case of mountainous
terrain or in areas with only secondary
roads available, a 15-mile drive) from a
hospital, or another facility described
in this subsection; or
``(II) is certified by the State as
being a necessary provider of health
care services to residents in the area;
``(ii) makes available 24-hour emergency care
services that a State determines are necessary for
ensuring access to emergency care services in each
area served by a critical access hospital;
[[Page 111 STAT. 371]]
``(iii) provides not more than 15 (or, in the
case of a facility under an agreement described in
subsection (f), 25) acute care inpatient beds
(meeting such standards as the Secretary may
establish) for providing inpatient care for a
period not to exceed 96 hours (unless a longer
period is required because transfer to a hospital
is precluded because of inclement weather or other
emergency conditions), except that a peer review
organization or equivalent entity may, on request,
waive the 96-hour restriction on a case-by-case
basis;
``(iv) meets such staffing requirements as
would apply under section 1861(e) to a hospital
located in a rural area, except that--
``(I) the facility need not meet
hospital standards relating to the
number of hours during a day, or days
during a week, in which the facility
must be open and fully staffed, except
insofar as the facility is required to
make available emergency care services
as determined under clause (ii) and must
have nursing services available on a 24-
hour basis, but need not otherwise staff
the facility except when an inpatient is
present;
``(II) the facility may provide any
services otherwise required to be
provided by a full-time, on site
dietitian, pharmacist, laboratory
technician, medical technologist, and
radiological technologist on a part-
time, off site basis under arrangements
as defined in section 1861(w)(1); and
``(III) the inpatient care described
in clause (iii) may be provided by a
physician assistant, nurse practitioner,
or clinical nurse specialist subject to
the oversight of a physician who need
not be present in the facility; and
``(v) meets the requirements of section
1861(aa)(2)(I).
``(d) Definition of Rural Health Network.--
``(1) In general.--In this section, the term `rural health
network' means, with respect to a State, an organization
consisting of--
``(A) at least 1 facility that the State has
designated or plans to designate as a critical access
hospital; and
``(B) at least 1 hospital that furnishes acute care
services.
``(2) Agreements.--
``(A) In general.--Each critical access hospital
that is a member of a rural health network shall have an
agreement with respect to each item described in
subparagraph (B) with at least 1 hospital that is a
member of the network.
``(B) Items described.--The items described in this
subparagraph are the following:
``(i) Patient referral and transfer.
``(ii) The development and use of
communications systems including (where
feasible)--
``(I) telemetry systems; and
[[Page 111 STAT. 372]]
``(II) systems for electronic
sharing of patient data.
``(iii) The provision of emergency and non-
emergency transportation among the facility and
the hospital.
``(C) Credentialing and quality assurance.--Each
critical access hospital that is a member of a rural
health network shall have an agreement with respect to
credentialing and quality assurance with at least--
``(i) 1 hospital that is a member of the
network;
``(ii) 1 peer review organization or
equivalent entity; or
``(iii) 1 other appropriate and qualified
entity identified in the State rural health care
plan.
``(e) Certification by the Secretary.--The Secretary shall certify a
facility as a critical access hospital if the facility--
``(1) is located in a State that has established a medicare
rural hospital flexibility program in accordance with subsection
(c);
``(2) is designated as a critical access hospital by the
State in which it is located; and
``(3) meets such other criteria as the Secretary may
require.
``(f) Permitting Maintenance of Swing Beds.--Nothing in this section
shall be construed to prohibit a State from designating or the Secretary
from certifying a facility as a critical access hospital solely because,
at the time the facility applies to the State for designation as a
critical access hospital, there is in effect an agreement between the
facility and the Secretary under section 1883 under which the facility's
inpatient hospital facilities are used for the provision of extended
care services, so long as the total number of beds that may be used at
any time for the furnishing of either such services or acute care
inpatient services does not exceed 25 beds and the number of beds used
at any time for acute care inpatient services does not exceed 15 beds.
For purposes of the previous sentence, any bed of a unit of the facility
that is licensed as a distinct-part skilled nursing facility at the time
the facility applies to the State for designation as a critical access
hospital shall not be counted.
``(g) Grants.--
``(1) Medicare rural hospital flexibility program.--The
Secretary may award grants to States that have submitted
applications in accordance with subsection (b) for--
``(A) engaging in activities relating to planning
and implementing a rural health care plan;
``(B) engaging in activities relating to planning
and implementing rural health networks; and
``(C) designating facilities as critical access
hospitals.
``(2) Rural emergency medical services.--
``(A) In general.--The Secretary may award grants to
States that have submitted applications in accordance
with subparagraph (B) for the establishment or expansion
of a program for the provision of rural emergency
medical services.
``(B) Application.--An application is in accordance
with this subparagraph if the State submits to the
Secretary at such time and in such form as the Secretary
may require an application containing the assurances
[[Page 111 STAT. 373]]
described in subparagraphs (A)(ii), (A)(iii), and (B) of
subsection (b)(1) and paragraph (3) of that subsection.
``(h) Grandfathering of Certain Facilities.--
``(1) In general.--Any medical assistance facility operating
in Montana and any rural primary care hospital designated by the
Secretary under this section prior to the date of the enactment
of the Balanced Budget Act of 1997 shall be deemed to have been
certified by the Secretary under subsection (e) as a critical
access hospital if such facility or hospital is otherwise
eligible to be designated by the State as a critical access
hospital under subsection (c).
``(2) Continuation of medical assistance facility and rural
primary care hospital terms.--Notwithstanding any other
provision of this title, with respect to any medical assistance
facility or rural primary care hospital described in paragraph
(1), any reference in this title to a `critical access hospital'
shall be deemed to be a reference to a `medical assistance
facility' or `rural primary care hospital'.
``(i) Waiver of Conflicting Part A Provisions.--The Secretary is
authorized to waive such provisions of this part and part D as are
necessary to conduct the program established under this section.
``(j) Authorization of Appropriations.--There are authorized to be
appropriated from the Federal Hospital Insurance Trust Fund for making
grants to all States under subsection (g), $25,000,000 in each of the
fiscal years 1998 through 2002.''.
(b) Report on Alternative to 96-Hour Rule.--Not later than June 1,
1998, the Secretary of Health and Human Services shall submit to
Congress a report on the feasibility of, and administrative requirements
necessary to establish an alternative for certain medical diagnoses (as
determined by the Secretary) to the 96-hour limitation for inpatient
care in critical access hospitals required by section 1820(c)(2)(B)(iii)
of the Social Security Act (42 U.S.C. 1395i-4(c)(2)(B)(iii)), as added
by subsection (a) of this section.
(c) Conforming Amendments Relating to Rural Primary Care Hospitals
and Critical Access Hospitals.--
(1) In general.--Title XI of the Social Security Act (42
U.S.C. 1301 et seq.) and title XVIII of that Act (42 U.S.C. 1395
et seq.) are each amended by striking ``rural primary care''
each place it appears and inserting ``critical access''.
(2) Definitions.--Section 1861(mm) of the Social Security
Act (42 U.S.C. 1395x(mm)) is amended to read as follows:
``critical access hospital; critical access hospital services
``(mm)(1) The term `critical access hospital' means a facility
certified by the Secretary as a critical access hospital under section
1820(e).
``(2) The term `inpatient critical access hospital services' means
items and services, furnished to an inpatient of a critical access
hospital by such facility, that would be inpatient hospital services if
furnished to an inpatient of a hospital by a hospital.
``(3) The term `outpatient critical access hospital services' means
medical and other health services furnished by a critical access
hospital on an outpatient basis.''.
(3) Part a payment.--Section 1814 of the Social Security Act
(42 U.S.C. 1395f) is amended--
[[Page 111 STAT. 374]]
(A) in subsection (a)(8), by striking ``72'' and
inserting ``96''; and
(B) by amending subsection (l) to read as follows:
``Payment for Inpatient Critical Access Hospital Services
``(l) The amount of payment under this part for inpatient critical
access hospital services is the reasonable costs of the critical access
hospital in providing such services.''.
(4) Payment continued to designated eachs.--Section
1886(d)(5)(D) of the Social Security Act (42 U.S.C.
1395ww(d)(5)(D)) is amended--
(A) in clause (iii)(III), by inserting ``as in
effect on September 30, 1997'' before the period at the
end; and
(B) in clause (v)--
(i) by inserting ``as in effect on September
30, 1997'' after ``1820(i)(1)''; and
(ii) by striking ``1820(g)'' and inserting
``1820(d)''.
(5) Part b payment.--Section 1834(g) of the Social Security
Act (42 U.S.C. 1395m(g)) is amended to read as follows:
``(g) Payment for Outpatient Critical Access Hospital Services.--The
amount of payment under this part for outpatient critical access
hospital services is the reasonable costs of the critical access
hospital in providing such services.''.
<<NOTE: 42 USC 1395i-4 note.>> (6) Transition for MAF.--
(A) In general.--The Secretary of Health and Human
Services shall provide for an appropriate transition for
a facility that, as of the date of the enactment of this
Act, operated as a limited service rural hospital under
a demonstration described in section 4008(i)(1) of the
Omnibus Budget Reconciliation Act of 1990 (42 U.S.C.
1395b-1 note) from such demonstration to the program
established under subsection (a). At the conclusion of
the transition period described in subparagraph (B), the
Secretary shall end such demonstration.
(B) Transition period described.--
(i) Initial period.--Subject to clause (ii),
the transition period described in this
subparagraph is the period beginning on the date
of the enactment of this Act and ending on October
1, 1998.
(ii) Extension.--If the Secretary determines
that the transition is not complete as of October
1, 1998, the Secretary shall provide for an
appropriate extension of the transition period.
<<NOTE: 42 USC 1395f note.>> (d) Effective Date.--The amendments
made by this section shall apply to services furnished on or after
October 1, 1997.
SEC. 4202. PROHIBITING DENIAL OF REQUEST BY RURAL REFERRAL CENTERS FOR
RECLASSIFICATION ON BASIS OF COMPARABILITY OF WAGES.
(a) In General.--Section 1886(d)(10)(D) (42 U.S.C. 1395ww(d)(10)(D))
is amended--
(1) by redesignating clause (iii) as clause (iv); and
(2) by inserting after clause (ii) the following new clause:
``(iii) Under the guidelines published by the Secretary under clause
(i), in the case of a hospital which has ever been classified by the
Secretary as a rural referral center under paragraph (5)(C), the Board
may not reject the application of the hospital under
[[Page 111 STAT. 375]]
this paragraph on the basis of any comparison between the average hourly
wage of the hospital and the average hourly wage of hospitals in the
area in which it is located.''.
<<NOTE: 42 USC 1395ww note.>> (b) Continuing Treatment of Previously
Designated Centers.--
(1) In general.--Any hospital classified as a rural referral
center by the Secretary of Health and Human Services under
section 1886(d)(5)(C) of the Social Security Act for fiscal year
1991 shall be classified as such a rural referral center for
fiscal year 1998 and each subsequent fiscal year.
(2) Budget neutrality.--The provisions of section
1886(d)(8)(D) of the Social Security Act shall apply to
reclassifications made pursuant to paragraph (1) in the same
manner as such provisions apply to a reclassification under
section 1886(d)(10) of such Act.
<<NOTE: 42 USC 1395ww note.>> SEC. 4203. HOSPITAL GEOGRAPHIC
RECLASSIFICATION PERMITTED FOR PURPOSES OF DISPROPORTIONATE
SHARE PAYMENT ADJUSTMENTS.
(a) In General.--For the period described in subsection (c), the
Medicare Geographic Classification Review Board shall consider the
application under section 1886(d)(10)(C)(i) of the Social Security Act
(42 U.S.C. 1395ww(d)(10)(C)(i)) of a hospital described in 1886(d)(1)(B)
of such Act (42 U.S.C. 1395ww(d)(1)(B)) to change the hospital's
geographic classification for purposes of determining for a fiscal year
eligibility for and amount of additional payment amounts under section
1886(d)(5)(F) of such Act (42 U.S.C. 1395ww(d)(5)(F)).
(b) Applicable Guidelines.--The Medicare Geographic Classification
Review Board shall apply the guidelines established for reclassification
under subclause (I) of section 1886(d)(10)(C)(i) of such Act to
reclassification by reason of subsection (a) until the Secretary of
Health and Human Services promulgates separate guidelines for such
reclassification.
(c) Period Described.--The period described in this subsection is
the period beginning on the date of the enactment of this Act and ending
30 months after such date.
SEC. 4204. MEDICARE-DEPENDENT, SMALL RURAL HOSPITAL PAYMENT EXTENSION.
(a) Special Treatment Extended.--
(1) Payment methodology.--Section 1886(d)(5)(G) (42 U.S.C.
1395ww(d)(5)(G)) is amended--
(A) in clause (i), by striking ``October 1, 1994,''
and inserting ``October 1, 1994, or beginning on or
after October 1, 1997, and before October 1, 2001,'';
and
(B) in clause (ii)(II), by striking ``October 1,
1994,'' and inserting ``October 1, 1994, or beginning on
or after October 1, 1997, and before October 1, 2001,''.
(2) Extension of target amount.--Section 1886(b)(3)(D) (42
U.S.C. 1395ww(b)(3)(D)) is amended--
(A) in the matter preceding clause (i), by striking
``September 30, 1994,'' and inserting ``September 30,
1994, and for cost reporting periods beginning on or
after October 1, 1997, and before October 1, 2001,'';
(B) in clause (ii), by striking ``and'' at the end;
(C) in clause (iii), by striking the period at the
end and inserting ``, and''; and
[[Page 111 STAT. 376]]
(D) by adding after clause (iii) the following new
clause:
``(iv) with respect to discharges occurring during fiscal
year 1998 through fiscal year 2000, the target amount for the
preceding year increased by the applicable percentage increase
under subparagraph (B)(iv).''.
<<NOTE: 42 USC 1395ww note.>> (3) Permitting hospitals to
decline reclassification.--Section 13501(e)(2) of OBRA-93 (42
U.S.C. 1395ww note) is amended by striking ``or fiscal year
1994'' and inserting ``, fiscal year 1994, fiscal year 1998,
fiscal year 1999, or fiscal year 2000''.
<<NOTE: 42 USC 1395ww note.>> (b) Effective Date.--The amendments
made by subsection (a) shall apply with respect to discharges occurring
on or after October 1, 1997.
SEC. 4205. RURAL HEALTH CLINIC SERVICES.
(a) Per-Visit Payment Limits for Provider-Based Clinics.--
(1) Extension of limit.--
(A) In general.--The matter in section 1833(f) (42
U.S.C. 1395l(f)) preceding paragraph (1) is amended by
striking ``independent rural health clinics'' and
inserting ``rural health clinics (other than such
clinics in rural hospitals with less than 50 beds)''.
<<NOTE: 42 USC 1395l note.>> (B) Effective date.--
The amendment made by subparagraph (A) applies to
services furnished on or after January 1, 1998.
(2) Technical clarification.--Section 1833(f)(1) (42 U.S.C.
1395l(f)(1)) is amended by inserting ``per visit'' after
``$46''.
(b) Assurance of Quality Services.--
(1) In general.--Subparagraph (I) of the first sentence of
section 1861(aa)(2) (42 U.S.C. 1395x(aa)(2)) is amended to read
as follows:
``(I) has a quality assessment and performance
improvement program, and appropriate procedures for
review of utilization of clinic services, as the
Secretary may specify,''.
<<NOTE: 42 USC 1395x note.>> (2) Effective date.--The
amendment made by paragraph (1) shall take effect on January 1,
1998.
(c) Waiver of Certain Staffing Requirements Limited to Clinics in
Program.--
(1) In general.--Section 1861(aa)(7)(B) (42 U.S.C.
1395x(aa)(7)(B)) is amended by inserting before the period ``,
or if the facility has not yet been determined to meet the
requirements (including subparagraph (J) of the first sentence
of paragraph (2)) of a rural health clinic''.
<<NOTE: 42 USC 1395x note.>> (2) Effective date.--The
amendment made by paragraph (1) applies to waiver requests made
on or after January 1, 1998.
(d) Refinement of Shortage Area Requirements.--
(1) Designation reviewed triennially.--Section 1861(aa)(2)
(42 U.S.C. 1395x(aa)(2)) is amended in the second sentence, in
the matter in clause (i) preceding subclause (I)--
(A) by striking ``and that is designated'' and
inserting ``and that, within the previous 3-year period,
has been designated''; and
(B) by striking ``or that is designated'' and
inserting ``or designated''.
[[Page 111 STAT. 377]]
(2) Area must have shortage of health care practitioners.--
Section 1861(aa)(2) (42 U.S.C. 1395x(aa)(2)), as amended by
paragraph (1), is further amended in the second sentence, in the
matter in clause (i) preceding subclause (I)--
(A) by striking the comma after ``personal health
services''; and
(B) by inserting ``and in which there are
insufficient numbers of needed health care practitioners
(as determined by the Secretary),'' after ``Bureau of
the Census)''.
(3) Previously qualifying clinics grandfathered only to
prevent shortage.--
(A) In General.--Section 1861(aa)(2) of the Social
Security Act (42 U.S.C. 1395x(aa)(2)) is amended in the
third sentence by inserting before the period ``if it is
determined, in accordance with criteria established by
the Secretary in regulations, to be essential to the
delivery of primary care services that would otherwise
be unavailable in the geographic area served by the
clinic''.
(B) Payment for certain physician assistant
services.--Section 1842(b)(6)(C) (42 U.S.C.
1395u(b)(6)(C)) is amended to read as follows: ``(C) in
the case of services described in clause (i) of section
1861(s)(2)(K), payment shall be made to either (i) the
employer of the physician assistant involved, or (ii)
with respect to a physician assistant who was the owner
of a rural health clinic (as described in section
1861(aa)(2)) for a continuous period beginning prior to
the date of the enactment of the Balanced Budget Act of
1997 and ending on the date that the Secretary
determines such rural health clinic no longer meets the
requirements of section 1861(aa)(2), for such services
provided before January 1, 2003, payment may be made
directly to the physician assistant; and''.
<<NOTE: 42 USC 1395x note.>> (4) Effective dates;
implementing regulations.--
(A) In general.--Except as otherwise provided, the
amendments made by the preceding paragraphs take effect
on the date of the enactment of this Act.
(B) Current rural health clinics.--The amendments
made by the preceding paragraphs take effect, with
respect to entities that are rural health clinics under
title XVIII of the Social Security Act (42 U.S.C. 1395
et seq.) on the date of enactment of this Act, on the
date of the enactment of this Act.
(C) Grandfathered clinics.--
(i) In general.--The amendment made by
paragraph (3)(A) shall take effect on the
effective date of regulations issued by the
Secretary under clause (ii).
(ii) Regulations.--The Secretary shall issue
final regulations implementing paragraph (3)(A)
that shall take effect no later than January 1,
1999.
<<NOTE: 42 USC 1395l note.>> SEC. 4206. MEDICARE REIMBURSEMENT FOR
TELEHEALTH SERVICES.
(a) In General.--Not later than January 1, 1999, the Secretary of
Health and Human Services shall make payments from the Federal
Supplementary Medical Insurance Trust Fund under part B of title XVIII
of the Social Security Act (42 U.S.C. 1395j et seq.) in accordance with
the methodology described in subsection
[[Page 111 STAT. 378]]
(b) for professional consultation via telecommunications systems with a
physician (as defined in section 1861(r) of such Act (42 U.S.C.
1395x(r)) or a practitioner (described in section 1842(b)(18)(C) of such
Act (42 U.S.C. 1395u(b)(18)(C)) furnishing a service for which payment
may be made under such part to a beneficiary under the medicare program
residing in a county in a rural area (as defined in section
1886(d)(2)(D) of such Act (42 U.S.C. 1395ww(d)(2)(D))) that is
designated as a health professional shortage area under section
332(a)(1)(A) of the Public Health Service Act (42 U.S.C. 254e(a)(1)(A)),
notwithstanding that the individual physician or practitioner providing
the professional consultation is not at the same location as the
physician or practitioner furnishing the service to that beneficiary.
(b) Methodology for Determining Amount of Payments.--Taking into
account the findings of the report required under section 192 of the
Health Insurance Portability and Accountability Act of 1996 (Public Law
104-191; 110 Stat. 1988), the findings of the report required under
paragraph (c), and any other findings related to the clinical efficacy
and cost-effectiveness of telehealth applications, the Secretary shall
establish a methodology for determining the amount of payments made
under subsection (a) within the following parameters:
(1) The payment shall shared between the referring physician
or practitioner and the consulting physician or practitioner.
The amount of such payment shall not be greater than the current
fee schedule of the consulting physician or practitioner for the
health care services provided.
(2) The payment shall not include any reimbursement for any
telephone line charges or any facility fees, and a beneficiary
may not be billed for any such charges or fees.
(3) The payment shall be made subject to the coinsurance and
deductible requirements under subsections (a)(1) and (b) of
section 1833 of the Social Security Act (42 U.S.C. 1395l).
(4) The payment differential of section 1848(a)(3) of such
Act (42 U.S.C. 1395w-4(a)(3)) shall apply to services furnished
by non-participating physicians. The provisions of section
1848(g) of such Act (42 U.S.C. 1395w-4(g)) and section
1842(b)(18) of such Act (42 U.S.C. 1395u(b)(18)) shall apply.
Payment for such service shall be increased annually by the
update factor for physicians' services determined under section
1848(d) of such Act (42 U.S.C. 1395w-4(d)).
(c) Supplemental Report.--Not later than January 1, 1999, the
Secretary shall submit a report to Congress which shall contain a
detailed analysis of--
(1) how telemedicine and telehealth systems are expanding
access to health care services;
(2) the clinical efficacy and cost-effectiveness of
telemedicine and telehealth applications;
(3) the quality of telemedicine and telehealth services
delivered; and
(4) the reasonable cost of telecommunications charges
incurred in practicing telemedicine and telehealth in rural,
frontier, and underserved areas.
(d) Expansion of Telehealth Services for Certain Medicare
Beneficiaries.--
(1) In general.--Not later than January 1, 1999, the
Secretary shall submit a report to Congress that examines the
[[Page 111 STAT. 379]]
possibility of making payments from the Federal Supplementary
Medical Insurance Trust Fund under part B of title XVIII of the
Social Security Act (42 U.S.C. 1395j et seq.) for professional
consultation via telecommunications systems with such a
physician or practitioner furnishing a service for which payment
may be made under such part to a beneficiary described in
paragraph (2), notwithstanding that the individual physician or
practitioner providing the professional consultation is not at
the same location as the physician or practitioner furnishing
the service to that beneficiary.
(2) Beneficiary described.--A beneficiary described in this
paragraph is a beneficiary under the medicare program under
title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.)
who does not reside in a rural area (as so defined) that is
designated as a health professional shortage area under section
332(a)(1)(A) of the Public Health Service Act (42 U.S.C.
254e(a)(1)(A)), who is homebound or nursing homebound, and for
whom being transferred for health care services imposes a
serious hardship.
(3) Report.--The report described in paragraph (1) shall
contain a detailed statement of the potential costs and savings
to the medicare program of making the payments described in that
paragraph using various reimbursement schemes.
<<NOTE: 42 USC 1395b-1 note.>> SEC. 4207. INFORMATICS, TELEMEDICINE, AND
EDUCATION DEMONSTRATION PROJECT.
(a) Purpose and Authorization.--
(1) In general.--Not later than 9 months after the date of
enactment of this section, the Secretary of Health and Human
Services shall provide for a demonstration project described in
paragraph (2).
(2) Description of project.--
(A) In general.--The demonstration project described
in this paragraph is a single demonstration project to
use eligible health care provider telemedicine networks
to apply high-capacity computing and advanced networks
to improve primary care (and prevent health care
complications) to medicare beneficiaries with diabetes
mellitus who are residents of medically underserved
rural areas or residents of medically underserved inner-
city areas.
(B) Medically underserved defined.--As used in this
paragraph, the term ``medically underserved'' has the
meaning given such term in section 330(b)(3) of the
Public Health Service Act (42 U.S.C. 254b(b)(3)).
(3) Waiver.--The Secretary shall waive such provisions of
title XVIII of the Social Security Act as may be necessary to
provide for payment for services under the project in accordance
with subsection (d).
(4) Duration of project.--The project shall be conducted
over a 4-year period.
(b) Objectives of Project.--The objectives of the project include
the following:
(1) Improving patient access to and compliance with
appropriate care guidelines for individuals with diabetes
mellitus through direct telecommunications link with information
networks in order to improve patient quality-of-life and reduce
overall health care costs.
[[Page 111 STAT. 380]]
(2) Developing a curriculum to train health professionals
(particularly primary care health professionals) in the use of
medical informatics and telecommunications.
(3) Demonstrating the application of advanced technologies,
such as video-conferencing from a patient's home, remote
monitoring of a patient's medical condition, interventional
informatics, and applying individualized, automated care
guidelines, to assist primary care providers in assisting
patients with diabetes in a home setting.
(4) Application of medical informatics to residents with
limited English language skills.
(5) Developing standards in the application of telemedicine
and medical informatics.
(6) Developing a model for the cost-effective delivery of
primary and related care both in a managed care environment and
in a fee-for-service environment.
(c) Eligible Health Care Provider Telemedicine Network Defined.--For
purposes of this section, the term ``eligible health care provider
telemedicine network'' means a consortium that includes at least one
tertiary care hospital (but no more than 2 such hospitals), at least one
medical school, no more than 4 facilities in rural or urban areas, and
at least one regional telecommunications provider and that meets the
following requirements:
(1) The consortium is located in an area with a high
concentration of medical schools and tertiary care facilities in
the United States and has appropriate arrangements (within or
outside the consortium) with such schools and facilities,
universities, and telecommunications providers, in order to
conduct the project.
(2) The consortium submits to the Secretary an application
at such time, in such manner, and containing such information as
the Secretary may require, including a description of the use to
which the consortium would apply any amounts received under the
project and the source and amount of non-Federal funds used in
the project.
(3) The consortium guarantees that it will be responsible
for payment for all costs of the project that are not paid under
this section and that the maximum amount of payment that may be
made to the consortium under this section shall not exceed the
amount specified in subsection (d)(3).
(d) Coverage as Medicare Part B Services.--
(1) In general.--Subject to the succeeding provisions of
this subsection, services related to the treatment or management
of (including prevention of complications from) diabetes for
medicare beneficiaries furnished under the project shall be
considered to be services covered under part B of title XVIII of
the Social Security Act.
(2) Payments.--
(A) In general.--Subject to paragraph (3), payment
for such services shall be made at a rate of 50 percent
of the costs that are reasonable and related to the
provision of such services. In computing such costs, the
Secretary shall include costs described in subparagraph
(B), but may not include costs described in subparagraph
(C).
[[Page 111 STAT. 381]]
(B) Costs that may be included.--The costs described
in this subparagraph are the permissible costs (as
recognized by the Secretary) for the following:
(i) The acquisition of telemedicine equipment
for use in patients' homes (but only in the case
of patients located in medically underserved
areas).
(ii) Curriculum development and training of
health professionals in medical informatics and
telemedicine.
(iii) Payment of telecommunications costs
(including salaries and maintenance of equipment),
including costs of telecommunications between
patients' homes and the eligible network and
between the network and other entities under the
arrangements described in subsection (c)(1).
(iv) Payments to practitioners and providers
under the medicare programs.
(C) Costs not included.--The costs described in this
subparagraph are costs for any of the following:
(i) The purchase or installation of
transmission equipment (other than such equipment
used by health professionals to deliver medical
informatics services under the project).
(ii) The establishment or operation of a
telecommunications common carrier network.
(iii) Construction (except for minor
renovations related to the installation of
reimbursable equipment) or the acquisition or
building of real property.
(3) Limitation.--The total amount of the payments that may
be made under this section shall not exceed $30,000,000 for the
period of the project (described in subsection (a)(4)).
(4) Limitation on cost-sharing.--The project may not impose
cost sharing on a medicare beneficiary for the receipt of
services under the project in excess of 20 percent of the costs
that are reasonable and related to the provision of such
services.
(e) Reports.--The Secretary shall submit to the Committee on Ways
and Means and the Committee Commerce of the House of Representatives and
the Committee on Finance of the Senate interim reports on the project
and a final report on the project within 6 months after the conclusion
of the project. The final report shall include an evaluation of the
impact of the use of telemedicine and medical informatics on improving
access of medicare beneficiaries to health care services, on reducing
the costs of such services, and on improving the quality of life of such
beneficiaries.
(f) Definitions.--For purposes of this section:
(1) Interventional informatics.--The term ``interventional
informatics'' means using information technology and virtual
reality technology to intervene in patient care.
(2) Medical informatics.--The term ``medical informatics''
means the storage, retrieval, and use of biomedical and related
information for problem solving and decision-making through
computing and communications technologies.
(3) Project.--The term ``project'' means the demonstration
project under this section.
[[Page 111 STAT. 382]]
Subtitle D--Anti-Fraud and Abuse Provisions and Improvements in
Protecting Program Integrity
CHAPTER 1--REVISIONS TO SANCTIONS FOR FRAUD AND ABUSE
SEC. 4301. PERMANENT EXCLUSION FOR THOSE CONVICTED OF 3 HEALTH CARE
RELATED CRIMES.
Section 1128(c)(3) (42 U.S.C. 1320a-7(c)(3)) is amended--
(1) in subparagraph (A), by inserting ``or in the case
described in subparagraph (G)'' after ``subsection (b)(12)'';
(2) in subparagraphs (B) and (D), by striking ``In the
case'' and inserting ``Subject to subparagraph (G), in the
case''; and
(3) by adding at the end the following new subparagraph:
``(G) In the case of an exclusion of an individual under subsection
(a) based on a conviction occurring on or after the date of the
enactment of this subparagraph, if the individual has (before, on, or
after such date) been convicted--
``(i) on one previous occasion of one or more offenses for
which an exclusion may be effected under such subsection, the
period of the exclusion shall be not less than 10 years, or
``(ii) on 2 or more previous occasions of one or more
offenses for which an exclusion may be effected under such
subsection, the period of the exclusion shall be permanent.''.
SEC. 4302. AUTHORITY TO REFUSE TO ENTER INTO MEDICARE AGREEMENTS WITH
INDIVIDUALS OR ENTITIES CONVICTED OF FELONIES.
(a) Medicare Part A.--Section 1866(b)(2) (42 U.S.C. 1395cc(b)(2)) is
amended--
(1) in subparagraph (B), by striking ``or'' at the end;
(2) in subparagraph (C), by striking the period at the end
and inserting ``, or''; and
(3) by adding at the end the following new subparagraph:
``(D) has ascertained that the provider has been
convicted of a felony under Federal or State law for an
offense which the Secretary determines is detrimental to
the best interests of the program or program
beneficiaries.''.
(b) Medicare Part B.--Section 1842(h) (42 U.S.C. 1395u(h)) is
amended by adding at the end the following new paragraph:
``(8) The Secretary may refuse to enter into an agreement with a
physician or supplier under this subsection, or may terminate or refuse
to renew such agreement, in the event that such physician or supplier
has been convicted of a felony under Federal or State law for an offense
which the Secretary determines is detrimental to the best interests of
the program or program beneficiaries.''.
<<NOTE: 42 USC 1395u note.>> (c) Effective Date.--The amendments
made by this section shall take effect on the date of the enactment of
this Act and apply to the entry and renewal of contracts on or after
such date.
SEC. 4303. EXCLUSION OF ENTITY CONTROLLED BY FAMILY MEMBER OF A
SANCTIONED INDIVIDUAL.
(a) In General.--Section 1128 (42 U.S.C. 1320a-7) is amended--
[[Page 111 STAT. 383]]
(1) in subsection (b)(8)(A)--
(A) in clause (i), by striking ``or'' at the end;
(B) in clause (ii), by striking the dash at the end
and inserting ``; or''; and
(C) by inserting after clause (ii) the following:
``(iii) who was described in clause (i) but is no
longer so described because of a transfer of ownership
or control interest, in anticipation of (or following) a
conviction, assessment, or exclusion described in
subparagraph (B) against the person, to an immediate
family member (as defined in subsection (j)(1)) or a
member of the household of the person (as defined in
subsection (j)(2)) who continues to maintain an interest
described in such clause--''; and
(2) by adding at the end the following new subsection:
``(j) Definition of Immediate Family Member and Member of
Household.--For purposes of subsection (b)(8)(A)(iii):
``(1) The term `immediate family member' means, with respect
to a person--
``(A) the husband or wife of the person;
``(B) the natural or adoptive parent, child, or
sibling of the person;
``(C) the stepparent, stepchild, stepbrother, or
stepsister of the person;
``(D) the father-, mother-, daughter-, son-,
brother-, or sister-in-law of the person;
``(E) the grandparent or grandchild of the person;
and
``(F) the spouse of a grandparent or grandchild of
the person.
``(2) The term `member of the household' means, with respect
to any person, any individual sharing a common abode as part of
a single family unit with the person, including domestic
employees and others who live together as a family unit, but not
including a roomer or boarder.''.
<<NOTE: 42 USC 1320a-7 note.>> (b) Effective Date.--The amendments
made by this section shall take effect on the date that is 45 days after
the date of the enactment of this Act.
SEC. 4304. IMPOSITION OF CIVIL MONEY PENALTIES.
(a) Civil Money Penalties for Persons That Contract With Excluded
Individuals.--Section 1128A(a) (42 U.S.C. 1320a-7a(a)) is amended--
(1) in paragraph (4), by striking ``or'' at the end;
(2) in paragraph (5), by adding ``or'' at the end; and
(3) by inserting after paragraph (5) the following new
paragraph:
``(6) arranges or contracts (by employment or otherwise)
with an individual or entity that the person knows or should
know is excluded from participation in a Federal health care
program (as defined in section 1128B(f)), for the provision of
items or services for which payment may be made under such a
program;''.
(b) Civil Money Penalties for Kickbacks.--
(1) Permitting secretary to impose civil money penalty.--
Section 1128A(a) (42 U.S.C. 1320a-7a(a)), as amended by
subsection (a), is amended--
(A) in paragraph (5), by striking ``or'' at the end;
(B) in paragraph (6), by adding ``or'' at the end;
and
[[Page 111 STAT. 384]]
(C) by adding after paragraph (6) the following new
paragraph:
``(7) commits an act described in paragraph (1) or (2) of
section 1128B(b);''.
(2) Description of civil money penalty applicable.--Section
1128A(a) (42 U.S.C. 1320a-7a(a)), as amended by paragraph (1),
is amended in the matter following paragraph (7)--
(A) by striking ``occurs).'' and inserting ``occurs;
or in cases under paragraph (7), $50,000 for each such
act).''; and
(B) by inserting after ``of such claim'' the
following: ``(or, in cases under paragraph (7), damages
of not more than 3 times the total amount of
remuneration offered, paid, solicited, or received,
without regard to whether a portion of such remuneration
was offered, paid, solicited, or received for a lawful
purpose)''.
<<NOTE: 42 USC 1320a-7a note.>> (c) Effective Dates.--
(1) Contracts with excluded persons.--The amendments made by
subsection (a) shall apply to arrangements and contracts entered
into after the date of the enactment of this Act.
(2) Kickbacks.--The amendments made by subsection (b) shall
apply to acts committed after the date of the enactment of this
Act.
CHAPTER 2--IMPROVEMENTS IN PROTECTING PROGRAM INTEGRITY
SEC. 4311. IMPROVING INFORMATION TO MEDICARE BENEFICIARIES.
(a) Inclusion of Information Regarding Medicare Waste, Fraud, and
Abuse in Annual Notice.--
(1) In General.--Section 1804 (42 U.S.C. 1395b-2) is amended
by adding at the end the following new subsection:
``(c) The notice provided under subsection (a) shall include--
``(1) a statement which indicates that because errors do
occur and because medicare fraud, waste, and abuse is a
significant problem, beneficiaries should carefully check any
explanation of benefits or itemized statement furnished pursuant
to section 1806 for accuracy and report any errors or
questionable charges by calling the toll-free phone number
described in paragraph (4);
``(2) a statement of the beneficiary's right to request an
itemized statement for medicare items and services (as provided
in section 1806(b));
``(3) a description of the program to collect information on
medicare fraud and abuse established under section 203(b) of the
Health Insurance Portability and Accountability Act of 1996; and
``(4) a toll-free telephone number maintained by the
Inspector General in the Department of Health and Human Services
for the receipt of complaints and information about waste,
fraud, and abuse in the provision or billing of services under
this title.''.
<<NOTE: 42 USC 1395b-2 note.>> (2) Effective date.--The
amendment made by this subsection shall apply to notices
provided on or after January 1, 1998.
[[Page 111 STAT. 385]]
(b) Clarification of Requirement To Provide Explanation of Medicare
Benefits.--
(1) In general.--Title XVIII is amended by inserting after
section 1805 (as added by section 4022) the following new
section:
``explanation of medicare benefits
<<NOTE: 42 USC 1395b-7.>> ``Sec. 1806. (a) In General.--The
Secretary shall furnish to each individual for whom payment has been
made under this title (or would be made without regard to any
deductible) a statement which--
``(1) lists the item or service for which payment has been
made and the amount of such payment for each item or service;
and
``(2) includes a notice of the individual's right to request
an itemized statement (as provided in subsection (b)).
``(b) Request for Itemized Statement for Medicare Items and
Services.--
``(1) In general.--An individual may submit a written
request to any physician, provider, supplier, or any other
person (including an organization, agency, or other entity) for
an itemized statement for any item or service provided to such
individual by such person with respect to which payment has been
made under this title.
``(2) 30-day period to furnish statement.--
``(A) In general.--Not later than 30 days after the
date on which a request under paragraph (1) has been
made, a person described in such paragraph shall furnish
an itemized statement describing each item or service
provided to the individual requesting the itemized
statement.
``(B) Penalty.--Whoever knowingly fails to furnish
an itemized statement in accordance with subparagraph
(A) shall be subject to a civil money penalty of not
more than $100 for each such failure. Such penalty shall
be imposed and collected in the same manner as civil
money penalties under subsection (a) of section 1128A
are imposed and collected under that section.
``(3) Review of itemized statement.--
``(A) In general.--Not later than 90 days after the
receipt of an itemized statement furnished under
paragraph (1), an individual may submit a written
request for a review of the itemized statement to the
Secretary.
``(B) Specific allegations.--A request for a review
of the itemized statement shall identify--
``(i) specific items or services that the
individual believes were not provided as claimed,
or
``(ii) any other billing irregularity
(including duplicate billing).
``(4) Findings of secretary.--The Secretary shall, with
respect to each written request submitted under paragraph (3),
determine whether the itemized statement identifies specific
items or services that were not provided as claimed or any other
billing irregularity (including duplicate billing) that has
resulted in unnecessary payments under this title.
``(5) Recovery of amounts.--The Secretary shall take all
appropriate measures to recover amounts unnecessarily paid
[[Page 111 STAT. 386]]
under this title with respect to a statement described in
paragraph (4).''.
(2) Conforming amendment.--Subsection (a) of section 203 of
the Health Insurance Portability and Accountability Act of
1996 <<NOTE: 42 USC 1395b-5.>> is repealed.
<<NOTE: 42 USC 1395b-7 note.>> (3) Effective dates.--
(A) Statement by secretary.--Paragraph (1) of
section 1806(a) of the Social Security Act, as added by
paragraph (1), and the repeal made by paragraph (2)
shall take effect on the date of the enactment of this
Act.
(B) Itemized statement.--Paragraph (2) of section
1806(a) and section 1806(b) of the Social Security Act,
as so added, shall take effect not later than January 1,
1999.
SEC. 4312. DISCLOSURE OF INFORMATION AND SURETY BONDS.
(a) Disclosure of Information and Surety Bond Requirement for
Suppliers of Durable Medical Equipment.--Section 1834(a) (42 U.S.C.
1395m(a)) is amended by inserting after paragraph (15) the following new
paragraph:
``(16) Disclosure of information and surety bond.--The
Secretary shall not provide for the issuance (or renewal) of a
provider number for a supplier of durable medical equipment, for
purposes of payment under this part for durable medical
equipment furnished by the supplier, unless the supplier
provides the Secretary on a continuing basis--
``(A) with--
``(i) full and complete information as to the
identity of each person with an ownership or
control interest (as defined in section
1124(a)(3)) in the supplier or in any
subcontractor (as defined by the Secretary in
regulations) in which the supplier directly or
indirectly has a 5 percent or more ownership
interest; and
``(ii) to the extent determined to be feasible
under regulations of the Secretary, the name of
any disclosing entity (as defined in section
1124(a)(2)) with respect to which a person with
such an ownership or control interest in the
supplier is a person with such an ownership or
control interest in the disclosing entity; and
``(B) with a surety bond in a form specified by the
Secretary and in an amount that is not less than
$50,000.
The Secretary may waive the requirement of a bond under
subparagraph (B) in the case of a supplier that provides a
comparable surety bond under State law.''.
(b) Surety Bond Requirement for Home Health Agencies.--
(1) In general.--Section 1861(o) (42 U.S.C. 1395x(o)) is
amended--
(A) in paragraph (6), by striking ``and'' at the
end;
(B) by redesignating paragraph (7) as paragraph (8);
(C) by inserting after paragraph (6) the following
new paragraph:
``(7) provides the Secretary on a continuing basis with a
surety bond in a form specified by the Secretary and in an
amount that is not less than $50,000; and''; and
[[Page 111 STAT. 387]]
(D) by adding at the end the following: ``The
Secretary may waive the requirement of a surety bond
under paragraph (7) in the case of an agency or
organization that provides a comparable surety bond
under State law.''.
(2) Conforming amendments.--Section 1861(v)(1)(H) (42 U.S.C.
1395x(v)(1)(H)) is amended--
(A) in clause (i), by striking ``the financial
security requirement described in subsection (o)(7)''
and inserting ``the surety bond requirement described in
subsection (o)(7) and the financial security requirement
described in subsection (o)(8)''; and
(B) in clause (ii), by striking ``the financial
security requirement described in subsection (o)(7)
applies'' and inserting ``the surety bond requirement
described in subsection (o)(7) and the financial
security requirement described in subsection (o)(8)
apply''.
(3) Reference to current disclosure requirement.--For
additional provisions requiring home health agencies to disclose
information on ownership and control interests, see section 1124
of the Social Security Act (42 U.S.C. 1320a-3).
(c) Authorizing Application of Disclosure and Surety Bond
Requirements to Other Health Care Providers.--Section 1834(a)(16) (42
U.S.C. 1395m(a)(16)), as added by subsection (a), is amended by adding
at the end the following: ``The Secretary, at the Secretary's
discretion, may impose the requirements of the first sentence with
respect to some or all providers of items or services under part A or
some or all suppliers or other persons (other than physicians or other
practitioners, as defined in section 1842(b)(18)(C)) who furnish items
or services under this part.''.
(d) Application to Comprehensive Outpatient Rehabilitation
Facilities (CORFs).--Section 1861(cc)(2) (42 U.S.C. 1395x(cc)(2)) is
amended--
(1) in subparagraph (H), by striking ``and'' at the end;
(2) by redesignating subparagraph (I) as subparagraph (J);
(3) by inserting after subparagraph (H) the following new
subparagraph:
``(I) provides the Secretary on a continuing basis with a
surety bond in a form specified by the Secretary and in an
amount that is not less than $50,000; and''; and
(4) by adding at the end the following flush sentence:
``The Secretary may waive the requirement of a surety bond under
subparagraph (I) in the case of a facility that provides a comparable
surety bond under State law.''.
(e) Application to Rehabilitation Agencies.--Section 1861(p) (42
U.S.C. 1395x(p)) is amended--
(1) in paragraph (4)(A)(v), by inserting after ``as the
Secretary may find necessary,'' the following: ``and provides
the Secretary on a continuing basis with a surety bond in a form
specified by the Secretary and in an amount that is not less
than $50,000,'', and
(2) by adding at the end the following: ``The Secretary may
waive the requirement of a surety bond under paragraph (4)(A)(v)
in the case of a clinic or agency that provides a comparable
surety bond under State law.''.
(f) Effective Dates.--
<<NOTE: 42 USC 1395m note.>> (1) Suppliers of durable
medical equipment.--The amendment made by subsection (a) shall
apply to suppliers
[[Page 111 STAT. 388]]
of durable medical equipment with respect to such equipment
furnished on or after January 1, 1998.
<<NOTE: 42 USC 1395x note.>> (2) Home health agencies.--The
amendments made by subsection (b) shall apply to home health
agencies with respect to services furnished on or after January
1, 1998. The Secretary of Health and Human Services shall modify
participation agreements under section 1866(a)(1) of the Social
Security Act (42 U.S.C. 1395cc(a)(1)) with respect to home
health agencies to provide for implementation of such amendments
on a timely basis.
<<NOTE: 42 USC 1395m note.>> (3) Other amendments.--The
amendments made by subsections (c) through (e) shall take effect
on the date of the enactment of this Act and may be applied with
respect to items and services furnished on or after January 1,
1998.
SEC. 4313. PROVISION OF CERTAIN IDENTIFICATION NUMBERS.
(a) Requirements To Disclose Employer Identification Numbers (EINS)
and Social Security Account Numbers (SSNs).--Section 1124(a)(1) (42
U.S.C. 1320a-3(a)(1)) is amended by inserting before the period at the
end the following: ``and supply the Secretary with the both the employer
identification number (assigned pursuant to section 6109 of the Internal
Revenue Code of 1986) and social security account number (assigned under
section 205(c)(2)(B)) of the disclosing entity, each person with an
ownership or control interest (as defined in subsection (a)(3)), and any
subcontractor in which the entity directly or indirectly has a 5 percent
or more ownership interest.
(b) Other Medicare Providers.--Section 1124A (42 U.S.C. 1320a-3a) is
amended--
(1) in subsection (a)--
(A) in paragraph (1), by striking ``and'' at the
end;
(B) in paragraph (2), by striking the period at the
end and inserting ``; and''; and
(C) by adding at the end the following new
paragraph:
``(3) including the employer identification number (assigned
pursuant to section 6109 of the Internal Revenue Code of 1986)
and social security account number (assigned under section
205(c)(2)(B)) of the disclosing part B provider and any person,
managing employee, or other entity identified or described under
paragraph (1) or (2).''; and
(2) in subsection (c)(1), by inserting ``(or, for purposes
of subsection (a)(3), any entity receiving payment)'' after ``on
an assignment-related basis''.
(c) Verification by Social Security Administration (SSA).--Section
1124A (42 U.S.C. 1320a-3a), as amended by subsection (b), is amended--
(1) by redesignating subsection (c) as subsection (d); and
(2) by inserting after subsection (b) the following new
subsection:
``(c) Verification.--
``(1) Transmittal by hhs.--The Secretary shall transmit--
``(A) to the Commissioner of Social Security
information concerning each social security account
number (assigned under section 205(c)(2)(B)), and
``(B) to the Secretary of the Treasury information
concerning each employer identification number (assigned
[[Page 111 STAT. 389]]
pursuant to section 6109 of the Internal Revenue Code of
1986),
supplied to the Secretary pursuant to subsection (a)(3) or
section 1124(c) to the extent necessary for verification of such
information in accordance with paragraph (2).
``(2) Verification.--The Commissioner of Social Security and
the Secretary of the Treasury shall verify the accuracy of, or
correct, the information supplied by the Secretary to such
official pursuant to paragraph (1), and shall report such
verifications or corrections to the Secretary.
``(3) Fees for verification.--The Secretary shall reimburse
the Commissioner and Secretary of the Treasury, at a rate
negotiated between the Secretary and such official, for the
costs incurred by such official in performing the verification
and correction services described in this subsection.''.
<<NOTE: 42 USC 1320a-3 note.>> (d) Report.--Before the amendments
made by this section may become effective, the Secretary of Health and
Human Services shall submit to Congress a report on steps the Secretary
has taken to assure the confidentiality of social security account
numbers that will be provided to the Secretary under such amendments.
<<NOTE: 42 USC 1320a-3 note.>> (e) Effective Dates.--
(1) Disclosure requirements.--The amendment made by
subsection (a) shall apply to the application of conditions of
participation, and entering into and renewal of contracts and
agreements, occurring more than 90 days after the date of
submission of the report under subsection (d).
(2) Other providers.--The amendments made by subsection (b)
shall apply to payment for items and services furnished more
than 90 days after the date of submission of such report.
SEC. 4314. ADVISORY OPINIONS REGARDING CERTAIN PHYSICIAN SELF-REFERRAL
PROVISIONS.
Section 1877(g) (42 U.S.C. 1395nn(g)) is amended by adding at the
end the following new paragraph:
``(6) Advisory opinions.--
``(A) In general.--The Secretary shall issue written
advisory opinions concerning whether a referral relating
to designated health services (other than clinical
laboratory services) is prohibited under this section.
Each advisory opinion issued by the Secretary shall be
binding as to the Secretary and the party or parties
requesting the opinion.
``(B) Application of certain rules.--The Secretary
shall, to the extent practicable, apply the rules under
subsections (b)(3) and (b)(4) and take into account the
regulations promulgated under subsection (b)(5) of
section 1128D in the issuance of advisory opinions under
this paragraph.
``(C) Regulations.--In order to implement this
paragraph in a timely manner, the Secretary may
promulgate regulations that take effect on an interim
basis, after notice and pending opportunity for public
comment.
``(D) Applicability.--This paragraph shall apply to
requests for advisory opinions made after the date which
is 90 days after the date of the enactment of this
paragraph and before the close of the period described
in section 1128D(b)(6).''.
[[Page 111 STAT. 390]]
SEC. 4315. REPLACEMENT OF REASONABLE CHARGE METHODOLOGY BY FEE
SCHEDULES.
(a) Application of Fee Schedule.--Section 1842 (42 U.S.C. 1395u) is
amended by adding at the end the following new subsection:
``(s)(1) The Secretary may implement a statewide or other areawide
fee schedule to be used for payment of any item or service described in
paragraph (2) which is paid on a reasonable charge basis. Any fee
schedule established under this paragraph for such item or service shall
be updated each year by the percentage increase in the consumer price
index for all urban consumers (United States city average) for the 12-
month period ending with June of the preceding year, except that in no
event shall a fee schedule for an item described in paragraph (2)(D) be
updated before 2003.
``(2) The items and services described in this paragraph are as
follows:
``(A) Medical supplies.
``(B) Home dialysis supplies and equipment (as defined in
section 1881(b)(8)).
``(C) Therapeutic shoes.
``(D) Parenteral and enteral nutrients, equipment, and
supplies.
``(E) Electromyogram devices
``(F) Salivation devices.
``(G) Blood products.
``(H) Transfusion medicine.''.
(b) Conforming Amendment.--Section 1833(a)(1) (42 U.S.C.
1395l(a)(1)) is amended--
(A) by striking ``and (P)'' and inserting ``(P)'';
and
(B) by striking the semicolon at the end and
inserting the following: ``, and (Q) with respect to
items or services for which fee schedules are
established pursuant to section 1842(s), the amounts
paid shall be 80 percent of the lesser of the actual
charge or the fee schedule established in such
section;''.
<<NOTE: 42 USC 1395l note.>> (c) Effective Dates.--The amendments
made by this section to the extent such amendments substitute fee
schedules for reasonable charges, shall apply to particular services as
of the date specified by the Secretary of Health and Human Services.
<<NOTE: 42 USC 1395u note.>> (d) Initial Budget Neutrality.--The
Secretary, in developing a fee schedule for particular services (under
the amendments made by this section), shall set amounts for the first
year period to which the fee schedule applies at a level so that the
total payments under title XVIII of the Social Security Act (42 U.S.C.
1395 et seq.) for those services for that year period shall be
approximately equal to the estimated total payments if such fee schedule
had not been implemented.
SEC. 4316. APPLICATION OF INHERENT REASONABLENESS TO ALL PART B SERVICES
OTHER THAN PHYSICIANS' SERVICES.
(a) In General.--Paragraphs (8) and (9) of section 1842(b) (42
U.S.C. 1395u(b)) are amended to read as follows:
<<NOTE: Regulations.>> ``(8)(A)(i) The Secretary shall by
regulation--
``(I) describe the factors to be used in determining the
cases (of particular items or services) in which the application
of this part (other than to physicians' services paid under
[[Page 111 STAT. 391]]
section 1848) results in the determination of an amount that,
because of its being grossly excessive or grossly deficient, is
not inherently reasonable, and
``(II) provide in those cases for the factors to be
considered in determining an amount that is realistic and
equitable.
``(ii) Notwithstanding the determination made in clause (i), the
Secretary may not apply factors that would increase or decrease the
payment under this part during any year for any particular item or
service by more than 15 percent from such payment during the preceding
year except as provided in subparagraph (B).
``(B) The Secretary may make a determination under this subparagraph
that would result in an increase or decrease under subparagraph (A) of
more than 15 percent of the payment amount for a year, but only if--
``(i) the Secretary's determination takes into account the
factors described in subparagraph (C) and any additional factors
the Secretary determines appropriate,
``(ii) the Secretary's determination takes into account the
potential impacts described in subparagraph (D), and
``(iii) the Secretary complies with the procedural
requirements of paragraph (9).
``(C) The factors described in this subparagraph are as follows:
``(i) The programs established under this title and title
XIX are the sole or primary sources of payment for an item or
service.
``(ii) The payment amount does not reflect changing
technology, increased facility with that technology, or
reductions in acquisition or production costs.
``(iii) The payment amount for an item or service under this
part is substantially higher or lower than the payment made for
the item or service by other purchasers.
``(D) The potential impacts of a determination under subparagraph
(B) on quality, access, and beneficiary liability, including the likely
effects on assignment rates and participation rates.
``(9)(A) The Secretary shall consult with representatives of
suppliers or other individuals who furnish an item or service before
making a determination under paragraph (8)(B) with regard to that item
or service.
<<NOTE: Federal Register, publication.>> ``(B) The Secretary shall
publish notice of a proposed determination under paragraph (8)(B) in the
Federal Register--
``(i) specifying the payment amount proposed to be
established with respect to an item or service,
``(ii) explaining the factors and data that the Secretary
took into account in determining the payment amount so
specified, and
``(iii) explaining the potential impacts described in
paragraph (8)(D).
``(C) After publication of the notice required by subparagraph (B),
the Secretary shall allow not less than 60 days for public comment on
the proposed determination.
<<NOTE: Federal Register, publication.>> ``(D)(i) Taking into
consideration the comments made by the public, the Secretary shall
publish in the Federal Register a final determination under paragraph
(8)(B) with respect to the payment amount to be established with respect
to the item or service.
``(ii) A final determination published pursuant to clause (i) shall
explain the factors and data that the Secretary took into consideration
in making the final determination.''.
[[Page 111 STAT. 392]]
(b) Conforming Amendment.--Section 1834(a)(10)(B) (42 U.S.C.
1395m(a)(10)(B)) is amended--
(1) by striking ``For covered items furnished on or after
January 1, 1991, the'' and inserting ``The'';
(2) by striking ``(other than subparagraph (D))''; and
(3) by striking all that follows ``payments under this
subsection'' and inserting a period.
<<NOTE: 42 USC 1395m note.>> (c) Effective Date.--The amendments
made by this section shall take effect on the date of the enactment of
this Act.
SEC. 4317. REQUIREMENT TO FURNISH DIAGNOSTIC INFORMATION.
(a) Inclusion of Non-Physician Practitioners in Requirement To
Provide Diagnostic Codes for Physician Services.--Paragraphs (1) and (2)
of section 1842(p) (42 U.S.C. 1395u(p)) are each amended by inserting
``or practitioner specified in subsection (b)(18)(C)'' after ``by a
physician''.
(b) Requirement To Provide Diagnostic Information When Ordering
Certain Items or Services Furnished by Another Entity.--Section 1842(p)
(42 U.S.C. 1395u(p)), is amended by adding at the end the following new
paragraph:
``(4) In the case of an item or service defined in paragraph (3),
(6), (8), or (9) of subsection 1861(s) ordered by a physician or a
practitioner specified in subsection (b)(18)(C), but furnished by
another entity, if the Secretary (or fiscal agent of the Secretary)
requires the entity furnishing the item or service to provide diagnostic
or other medical information in order for payment to be made to the
entity, the physician or practitioner shall provide that information to
the entity at the time that the item or service is ordered by the
physician or practitioner.''.
<<NOTE: 42 USC 1395u note.>> (c) Effective Date.--The amendments
made by this section shall apply to items and services furnished on or
after January 1, 1998.
SEC. 4318. REPORT BY GAO ON OPERATION OF FRAUD AND ABUSE CONTROL
PROGRAM.
Section 1817(k)(6) (42 U.S.C. 1395i(k)(6)) is amended by inserting
``June 1, 1998, and'' after ``Not later than''.
SEC. 4319. COMPETITIVE BIDDING DEMONSTRATION PROJECTS.
(a) General Rule.--Part B of title XVIII (42 U.S.C. 1395j et seq.)
is amended by inserting after section 1846 the following new section:
<<NOTE: 42 USC 1395w-3.>> ``SEC. 1847. DEMONSTRATION PROJECTS FOR
COMPETITIVE ACQUISITION OF ITEMS AND SERVICES.
``(a) Establishment of Demonstration Project Bidding Areas.--
``(1) In general.--The Secretary shall implement not more
than 5 demonstration projects under which competitive
acquisition areas are established for contract award purposes
for the furnishing under this part of the items and services
described in subsection (d).
``(2) Project requirements.--Each demonstration project
under paragraph (1)--
``(A) shall include such group of items and services
as the Secretary may prescribe,
``(B) shall be conducted in not more than 3
competitive acquisition areas, and
[[Page 111 STAT. 393]]
``(C) shall be operated over a 3-year period.
``(3) Criteria for establishment of competitive acquisition
areas.--Each competitive acquisition area established under a
demonstration project implemented under paragraph (1)--
``(A) shall be, or shall be within, a metropolitan
statistical area (as defined by the Secretary of
Commerce), and
``(B) shall be chosen based on the availability and
accessibility of entities able to furnish items and
services, and the probable savings to be realized by the
use of competitive bidding in the furnishing of items
and services in such area.
``(b) Awarding of Contracts in Areas.--
``(1) In general.--The Secretary shall conduct a competition
among individuals and entities supplying items and services
described in subsection (c) for each competitive acquisition
area established under a demonstration project implemented under
subsection (a).
``(2) Conditions for awarding contract.--The Secretary may
not award a contract to any entity under the competition
conducted pursuant to paragraph (1) to furnish an item or
service unless the Secretary finds that the entity meets quality
standards specified by the Secretary that the total amounts to
be paid under the contract are expected to be less than the
total amounts that would otherwise be paid.
``(3) Contents of contract.--A contract entered into with an
entity under the competition conducted pursuant to paragraph (1)
is subject to terms and conditions that the Secretary may
specify.
``(4) Limit on number of contractors.--The Secretary may
limit the number of contractors in a competitive acquisition
area to the number needed to meet projected demand for items and
services covered under the contracts.
``(c) Expansion of Projects.--
``(1) Evaluations.--The Secretary shall evaluate the impact
of the implementation of the demonstration projects on medicare
program payments, access, diversity of product selection, and
quality. The Secretary shall make annual reports to the
Committees on Ways and Means and Commerce of the House of
Representatives and the Committee on Finance of the Senate on
the results of the evaluation described in the preceding
sentence and a final report not later than 6 months after the
termination date specified in subsection (e).
``(2) Expansion.--If the Secretary determines from the
evaluations under paragraph (1) that there is clear evidence
that any demonstration project--
``(A) results in a decrease in Federal expenditures
under this title, and
``(B) does not reduce program access, diversity of
product selection, and quality under this title,
the Secretary may expand the project to additional competitive
acquisition areas.
``(d) Services described.--The items and services to which this
section applies are all items and services covered under this part
(except for physicians' services as defined in section 1861(s)(1)) that
the Secretary may specify. At least one demonstration project shall
include oxygen and oxygen equipment.
[[Page 111 STAT. 394]]
``(e) Termination.--Notwithstanding any other provision of this
section, all projects under this section shall terminate not later than
December 31, 2002.''.
(b) Items and Services To Be Furnished Only Through Competitive
Acquisition.--Section 1862(a) (42 U.S.C. 1395y(a)) is amended--
(1) by striking ``or'' at the end of paragraph (15),
(2) by striking the period at the end of paragraph (16) and
inserting ``; or'', and
(3) by inserting after paragraph (16) the following new
paragraph:
``(17) where the expenses are for an item or service
furnished in a competitive acquisition area (as established by
the Secretary under section 1847(a)) by an entity other than an
entity with which the Secretary has entered into a contract
under section 1847(b) for the furnishing of such an item or
service in that area, unless the Secretary finds that the
expenses were incurred in a case of urgent need, or in other
circumstances specified by the Secretary.''.
<<NOTE: 42 USC 1395w-3 note.>> (c) Study by GAO.--The Comptroller of
the United States shall study the effectiveness of the establishment of
competitive acquisition areas under section 1847(a) of the Social
Security Act, as added by this section.
SEC. 4320. PROHIBITING UNNECESSARY AND WASTEFUL MEDICARE PAYMENTS FOR
CERTAIN ITEMS.
Section 1861(v) (42 U.S.C. 1395x(v)) is amended by adding at the end
the following new paragraph:
``(8) Items unrelated to patient care.--Reasonable costs do
not include costs for the following--
``(i) entertainment, including tickets to sporting
and other entertainment events;
``(ii) gifts or donations;
``(iii) personal use of motor vehicles;
``(iv) costs for fines and penalties resulting from
violations of Federal, State, or local laws; and
``(v) education expenses for spouses or other
dependents of providers of services, their employees or
contractors.''.
SEC. 4321. NONDISCRIMINATION IN POST-HOSPITAL REFERRAL TO HOME HEALTH
AGENCIES AND OTHER ENTITIES.
(a) Notification of Availability of Home Health Agencies and Other
Entities As Part of Discharge Planning Process.--Section 1861(ee)(2) (42
U.S.C. 1395x(ee)(2)) is amended--
(1) in subparagraph (D), by inserting before the period the
following: ``, including the availability of home health
services through individuals and entities that participate in
the program under this title and that serve the area in which
the patient resides and that request to be listed by the
hospital as available''; and
(2) by adding at the end the following new subparagraph:
``(H) Consistent with section 1802, the discharge plan
shall--
``(i) not specify or otherwise limit the qualified
provider which may provide post-hospital home health
services, and
``(ii) identify (in a form and manner specified by
the Secretary) any entity to whom the individual is
referred in which the hospital has a disclosable
financial interest
[[Page 111 STAT. 395]]
(as specified by the Secretary consistent with section
1866(a)(1)(S)) or which has such an interest in the
hospital.''.
(b) Maintenance and Disclosure of Information on Post-Hospital Home
Health Agencies and Other Entities.--Section 1866(a)(1) (42 U.S.C.
1395cc(a)(1)) is amended--
(1) by striking ``and'' at the end of subparagraph (Q),
(2) by striking the period at the end of subparagraph (R),
and
(3) by adding at the end the following new subparagraph:
``(S) in the case of a hospital that has a financial
interest (as specified by the Secretary in regulations) in an
entity to which individuals are referred as described in section
1861(ee)(2)(H)(ii), or in which such an entity has such a
financial interest, or in which another entity has such a
financial interest (directly or indirectly) with such hospital
and such an entity, to maintain and disclose to the Secretary
(in a form and manner specified by the Secretary) information
on--
``(i) the nature of such financial interest,
``(ii) the number of individuals who were discharged
from the hospital and who were identified as requiring
home health services, and
``(iii) the percentage of such individuals who
received such services from such provider (or another
such provider).''.
(c) Disclosure of Information to the Public.--Title XI is amended by
inserting after section 1145 the following new section:
<<NOTE: 42 usc 1320b-16.>> ``public disclosure of certain information on
hospital financial interest and referral patterns
``Sec. 1146. The Secretary shall make available to the public, in a
form and manner specified by the Secretary, information disclosed to the
Secretary pursuant to section 1866(a)(1)(S).''.
<<NOTE: 42 USC 1395x note.>> (d) Effective Dates.--
(1) The amendments made by subsection (a) shall apply to
discharges occurring on or after the date which is 90 days after
the date of the enactment of this Act.
<<NOTE: Regulations. 42 USC 1320b-16 note.>> (2) The
Secretary of Health and Human Services shall issue regulations
by not later than the date which is 1 year after the date of the
enactment of this Act to carry out the amendments made by
subsections (b) and (c) and such amendments shall take effect as
of such date (on or after the issuance of such regulations) as
the Secretary specifies in such regulations.
CHAPTER 3--CLARIFICATIONS AND TECHNICAL CHANGES
SEC. 4331. OTHER FRAUD AND ABUSE RELATED PROVISIONS.
(a) Reference Correction.--(1) Section 1128D(b)(2)(D) (42 U.S.C.
1320a-7d(b)(2)(D)), as added by section 205 of the Health Insurance
Portability and Accountability Act of 1996, is amended by striking
``1128B(b)'' and inserting ``1128A(b)''.
(2) Section 1128E(g)(3)(C) (42 U.S.C. 1320a-7e(g)(3)(C)) is amended
by striking ``Veterans' Administration'' and inserting ``Department of
Veterans Affairs''.
[[Page 111 STAT. 396]]
(b) Language in Definition of Conviction.--Section 1128E(g)(5) (42
U.S.C. 1320a-7e(g)(5)), as inserted by section 221(a) of the Health
Insurance Portability and Accountability Act of 1996, is amended by
striking ``paragraph (4)'' and inserting ``paragraphs (1) through (4)''.
(c) Implementation of Exclusions.--Section 1128 (42 U.S.C. 1320a-7)
is amended--
(1) in subsection (a), by striking ``any program under title
XVIII and shall direct that the following individuals and
entities be excluded from participation in any State health care
program (as defined in subsection (h))'' and inserting ``any
Federal health care program (as defined in section 1128B(f))'';
and
(2) in subsection (b), by striking ``any program under title
XVIII and may direct that the following individuals and entities
be excluded from participation in any State health care
program'' and inserting ``any Federal health care program (as
defined in section 1128B(f))''.
(d) Sanctions for Failure to Report.--Section 1128E(b) (42 U.S.C.
1320a-7e(b)), as inserted by section 221(a) of the Health Insurance
Portability and Accountability Act of 1996, is amended by adding at the
end the following:
``(6) Sanctions for failure to report.--
``(A) Health plans.--Any health plan that fails to
report information on an adverse action required to be
reported under this subsection shall be subject to a
civil money penalty of not more than $25,000 for each
such adverse action not reported. Such penalty shall be
imposed and collected in the same manner as civil money
penalties under subsection (a) of section 1128A are
imposed and collected under that section.
<<NOTE: Publication.>> ``(B) Governmental
agencies.--The Secretary shall provide for a publication
of a public report that identifies those Government
agencies that have failed to report information on
adverse actions as required to be reported under this
subsection.''.
(e) Clarification of Treatment of Certain Waivers and Payments of
Premiums.--Section 1128A(i)(6) (42 U.S.C. 1320a-7a(i)(6)) is amended--
(1) in subparagraph (A)(iii)--
(A) in subclause (I), by adding ``or'' at the end;
(B) in subclause (II), by striking ``or'' at the
end; and
(C) by striking subclause (III);
(2) by redesignating subparagraphs (B) and (C) as
subparagraphs (C) and (D); and
(3) by inserting after subparagraph (A) the following:
``(B) any permissible waiver as specified in section
1128B(b)(3) or in regulations issued by the
Secretary;''.
<<NOTE: 42 USC 1320a-7e note.>> (f) Effective Dates.--
(1) In general.--Except as provided in this subsection, the
amendments made by this section shall be effective as if
included in the enactment of the Health Insurance Portability
and Accountability Act of 1996.
(2) Federal health program.--The amendments made by
subsection (c) shall take effect on the date of the enactment of
this Act.
[[Page 111 STAT. 397]]
(3) Sanction for failure to report.--The amendment made by
subsection (d) shall apply to failures occurring on or after the
date of the enactment of this Act.
Subtitle E--Provisions Relating to Part A Only
CHAPTER 1--PAYMENT OF PPS HOSPITALS
SEC. 4401. PPS HOSPITAL PAYMENT UPDATE.
(a) In General.--Section 1886(b)(3)(B)(i) (42 U.S.C.
1395ww(b)(3)(B)(i)) is amended--
(1) by striking ``and'' at the end of subclause (XII), and
(2) by striking subclause (XIII) and inserting the
following:
``(XIII) for fiscal year 1998, 0 percent,
``(XIV) for fiscal year 1999, the market basket percentage
increase minus 1.9 percentage points for hospitals in all areas,
``(XV) for fiscal year 2000, the market basket percentage
increase minus 1.8 percentage points for hospitals in all areas,
``(XVI) for each of fiscal years 2001 and 2002, the market
basket percentage increase minus 1.1 percentage point for
hospitals in all areas, and
``(XVII) for fiscal year 2003 and each subsequent fiscal
year, the market basket percentage increase for hospitals in all
areas.''.
<<NOTE: 42 USC 1395ww note.>> (b) Temporary Relief for Certain Non-
Teaching, Non-DSH Hospitals.--
(1) In general.--In the case of a hospital described in
paragraph (2) for its cost reporting period--
(A) beginning in fiscal year 1998 the amount of
payment made to the hospital under section 1886(d) of
the Social Security Act for discharges occurring during
such fiscal year only shall be increased as though the
applicable percentage increase (otherwise applicable to
discharges occurring during fiscal year 1998 under
section 1886(b)(3)(B)(i)(XIII) of the Social Security
Act (42 U.S.C. 1395ww(b)(3)(B)(i)(XIII))) had been
increased by 0.5 percentage points; and
(B) beginning in fiscal year 1999 the amount of
payment made to the hospital under section 1886(d) of
the Social Security Act for discharges occurring during
such fiscal year only shall be increased as though the
applicable percentage increase (otherwise applicable to
discharges occurring during fiscal year 1999 under
section 1886(b)(3)(B)(i)(XIII) of the Social Security
Act (42 U.S.C. 1395ww(b)(3)(B)(i)(XIII))) had been
increased by 0.3 percentage points.
Subparagraph (A) shall not apply in computing the increase under
subparagraph (B) and neither subparagraph shall affect payment
for discharges for any hospital occurring during a fiscal year
after fiscal year 1999. Payment increases under this subsection
for discharges occurring during a fiscal year are subject to
settlement after the close of the fiscal year.
(2) Hospitals covered.--A hospital described in this
paragraph for a cost reporting period is a hospital--
(A) that is described in paragraph (3) for such
period;
[[Page 111 STAT. 398]]
(B) that is located in a State in which the amount
of the aggregate payments under section 1886(d) of such
Act for hospitals located in the State and described in
paragraph (3) for their cost reporting periods beginning
during fiscal year 1995 is less than the aggregate
allowable operating costs of inpatient hospital services
(as defined in section 1886(a)(4) of such Act) for all
such hospitals in such State with respect to such cost
reporting periods; and
(C) with respect to which the payments under section
1886(d) of such Act (42 U.S.C. 1395ww(d)) for discharges
occurring in the cost reporting period involved, as
estimated by the Secretary, is less than the allowable
operating costs of inpatient hospital services (as
defined in section 1886(a)(4) of such Act (42 U.S.C.
1395ww(a)(4)) for such hospital for such period, as
estimated by the Secretary.
(3) Non-teaching, non-DSH hospitals described.--A hospital
described in this paragraph for a cost reporting period is a
subsection (d) hospital (as defined in section 1886(d)(1)(B) of
such Act (42 U.S.C. 1395ww(d)(1)(B))) that--
(A) is not receiving any additional payment amount
described in section 1886(d)(5)(F) of such Act (42
U.S.C. 1395ww(d)(5)(F)) for discharges occurring during
the period;
(B) is not receiving any additional payment under
section 1886(d)(5)(B) of such Act (42 U.S.C.
1395ww(d)(5)(B)) or a payment under section 1886(h) of
such Act (42 U.S.C. 1395ww(h)) for discharges occurring
during the period; and
(C) does not qualify for payment under section
1886(d)(5)(G) of such Act (42 U.S.C. 1395ww(d)(5)(G))
for the period.
SEC. 4402. MAINTAINING SAVINGS FROM TEMPORARY REDUCTION IN CAPITAL
PAYMENTS FOR PPS HOSPITALS.
Section 1886(g)(1)(A) (42 U.S.C. 1395ww(g)(1)(A)) is amended by
adding at the end the following: ``In addition to the reduction
described in the preceding sentence, for discharges occurring on or
after October 1, 1997, the Secretary shall apply the budget neutrality
adjustment factor used to determine the Federal capital payment rate in
effect on September 30, 1995 (as described in section 412.352 of title
42 of the Code of Federal Regulations), to (i) the unadjusted standard
Federal capital payment rate (as described in section 412.308(c) of that
title, as in effect on September 30, 1997), and (ii) the unadjusted
hospital-specific rate (as described in section 412.328(e)(1) of that
title, as in effect on September 30, 1997), and, for discharges
occurring on or after October 1, 1997, and before September 30, 2002,
reduce the rates described in clauses (i) and (ii) by 2.1 percent.''.
SEC. 4403. DISPROPORTIONATE SHARE.
(a) In General.--Section 1886(d)(5)(F) (42 U.S.C. 1395ww(d)(5)(F))
is amended--
(1) in clause (i) by inserting ``and before October 1,
1997'' after ``May 1, 1986'';
(2) in clause (ii), by striking ``The amount'' and inserting
``Subject to clause (ix), the amount''; and
(3) by adding at the end the following new clause:
``(ix) In the case of discharges occurring--
[[Page 111 STAT. 399]]
``(I) during fiscal year 1998, the additional payment amount
otherwise determined under clause (ii) shall be reduced by 1
percent;
``(II) during fiscal year 1999, such additional payment
amount shall be reduced by 2 percent;
``(III) during fiscal year 2000, such additional payment
amount shall be reduced by 3 percent;
``(IV) during fiscal year 2001, such additional payment
amount shall be reduced by 4 percent;
``(V) during fiscal year 2002, such additional payment
amount shall be reduced by 5 percent; and
``(VI) during fiscal year 2003 and each subsequent fiscal
year, such additional payment amount shall be reduced by 0
percent.''.
<<NOTE: 42 USC 1395ww note.>> (b) Report on New Payment Formula.--
(1) Report.--Not later than 1 year after the date of the
enactment of this Act, the Secretary of Health and Human
Services shall submit to the Committee on Ways and Means of the
House of Representatives and the Committee on Finance of the
Senate a report that contains a formula for determining
additional payment amounts to hospitals under section
1886(d)(5)(F) of the Social Security Act (42 U.S.C.
1395ww(d)(5)(F)).
(2) Factors in Determination of Formula.--In determining
such formula the Secretary shall--
(A) establish a single threshold for costs incurred
by hospitals in serving low-income patients, and
(B) consider the costs described in paragraph (3).
(3) The costs described in this paragraph are as follows:
(A) The costs incurred by the hospital during a
period (as determined by the Secretary) of furnishing
hospital services to individuals who are entitled to
benefits under part A of title XVIII of the Social
Security Act and who receive supplemental security
income benefits under title XVI of such Act (excluding
any supplementation of those benefits by a State under
section 1616 of such Act (42 U.S.C. 1382e)).
(B) The costs incurred by the hospital during a
period (as so determined) of furnishing hospital
services to individuals who receive medical assistance
under the State plan under title XIX of such Act and are
not entitled to benefits under part A of title XVIII of
such Act (including individuals enrolled in a managed
care organization (as defined in section 1903(m)(1)(A)
of such Act (42 U.S.C. 1396b(m)(1)(A)) or any other
managed care plan under such title and individuals who
receive medical assistance under such title pursuant to
a waiver approved by the Secretary under section 1115 of
such Act (42 U.S.C. 1315)).
<<NOTE: 42 USC 1395ww note.>> (c) Data Collection.--In developing
the formula described in subsection (b), the Secretary of Health and
Human Services may require any subsection (d) hospital (as defined in
section 1886(d)(1)(B) of the Social Security Act (42 U.S.C.
1395ww(d)(1)(B))) receiving additional payments by reason of section
1886(d)(5)(F) of such Act (42 U.S.C. 1395ww(d)(5)(F)) to submit to the
Secretary any information that the Secretary determines is necessary to
develop such formula.
[[Page 111 STAT. 400]]
SEC. 4404. MEDICARE CAPITAL ASSET SALES PRICE EQUAL TO BOOK VALUE.
(a) In General.--Section 1861(v)(1)(O) (42 U.S.C. 1395x(v)(1)(O)) is
amended--
(1) in clause (i)--
(A) by striking ``and (if applicable) a return on
equity capital'';
(B) by striking ``hospital or skilled nursing
facility'' and inserting ``provider of services'';
(C) by striking ``clause (iv)'' and inserting
``clause (iii)''; and
(D) by striking ``the lesser of the allowable
acquisition cost'' and all that follows and inserting
``the historical cost of the asset, as recognized under
this title, less depreciation allowed, to the owner of
record as of the date of enactment of the Balanced
Budget Act of 1997 (or, in the case of an asset not in
existence as of that date, the first owner of record of
the asset after that date).'';
(2) by striking clause (ii); and
(3) by redesignating clauses (iii) and (iv) as clauses (ii)
and (iii), respectively.
<<NOTE: 42 USC 1395x note.>> (b) Effective Date.--The amendments
made by subsection (a) apply to changes of ownership that occur after
the third month beginning after the date of enactment of this section.
SEC. 4405. ELIMINATION OF IME AND DSH PAYMENTS ATTRIBUTABLE TO OUTLIER
PAYMENTS.
(a) Indirect Medical Education.--Section 1886(d)(5)(B)(i)(I) (42
U.S.C. 1395ww(d)(5)(B)(i)(I)) is amended by inserting ``, for cases
qualifying for additional payment under subparagraph (A)(i),'' before
``the amount paid to the hospital under subparagraph (A)''.
(b) Disproportionate Share Adjustments.--Section
1886(d)(5)(F)(ii)(I) (42 U.S.C. 1395ww(d)(5)(F)(ii)(I)) is amended by
inserting ``, for cases qualifying for additional payment under
subparagraph (A)(i),'' before ``the amount paid to the hospital under
subparagraph (A)''.
(c) Cost Outlier Payments.--Section 1886(d)(5)(A)(ii) (42 U.S.C.
1395ww(d)(5)(A)(ii)) is amended by striking ``exceed the applicable DRG
prospective payment rate'' and inserting ``exceed the sum of the
applicable DRG prospective payment rate plus any amounts payable under
subparagraphs (B) and (F)''.
<<NOTE: 42 USC 1395ww note.>> (d) Effective Date.--The amendments
made by this section apply to discharges occurring after September 30,
1997.
SEC. 4406. INCREASE BASE PAYMENT RATE TO PUERTO RICO HOSPITALS.
Section 1886(d)(9)(A) (42 U.S.C. 1395ww(d)(9)(A)) is amended--
(1) in the matter preceding clause (i), by striking ``in a
fiscal year beginning on or after October 1, 1987,'',
(2) in clause (i), by striking ``75 percent'' and inserting,
``for discharges beginning on or after October 1, 1997, 50
percent (and for discharges between October 1, 1987, and
September 30, 1997, 75 percent)'', and
(3) in clause (ii), by striking ``25 percent'' and
inserting, ``for discharges beginning in a fiscal year beginning
on or after October 1, 1997, 50 percent (and for discharges
between October 1, 1987 and September 30, 1997, 25 percent)''.
[[Page 111 STAT. 401]]
SEC. 4407. CERTAIN HOSPITAL DISCHARGES TO POST ACUTE CARE.
Section 1886(d)(5) (42 U.S.C. 1395ww(d)(5)) is amended--
(1) in subparagraph (I)(ii) by inserting ``not taking in
account the effect of subparagraph (J),'' after ``in a fiscal
year, ''; and
(2) by adding at the end the following new subparagraph:
``(J)(i) The Secretary shall treat the term `transfer case' (as
defined in subparagraph (I)(ii)) as including the case of a qualified
discharge (as defined in clause (ii)), which is classified within a
diagnosis-related group described in clause (iii), and which occurs on
or after October 1, 1998. In the case of a qualified discharge for which
a substantial portion of the costs of care are incurred in the early
days of the inpatient stay (as defined by the Secretary), in no case may
the payment amount otherwise provided under this subsection exceed an
amount equal to the sum of--
``(I) 50 percent of the amount of payment under this
subsection for transfer cases (as established under subparagraph
(I)(i)), and
``(II) 50 percent of the amount of payment which would have
been made under this subsection with respect to the qualified
discharge if no transfer were involved.
``(ii) For purposes of clause (i), subject to clause (iii), the term
`qualified discharge' means a discharge classified with a diagnosis-
related group (described in clause (iii)) of an individual from a
subsection (d) hospital, if upon such discharge the individual--
``(I) is admitted as an inpatient to a hospital or hospital
unit that is not a subsection (d) hospital for the provision of
inpatient hospital services;
``(II) is admitted to a skilled nursing facility;
``(III) is provided home health services from a home health
agency, if such services relate to the condition or diagnosis
for which such individual received inpatient hospital services
from the subsection (d) hospital, and if such services are
provided within an appropriate period (as determined by the
Secretary); or
``(IV) for discharges occurring on or after October 1, 2000,
the individual receives post discharge services described in
clause (iv)(I).
``(iii) Subject to clause (iv), a diagnosis-related group described
in this clause is--
``(I) 1 of 10 diagnosis-related groups selected by the
Secretary based upon a high volume of discharges classified
within such groups and a disproportionate use of post discharge
services described in clause (ii); and
``(II) a diagnosis-related group specified by the Secretary
under clause (iv)(II).
``(iv) The Secretary shall include in the proposed rule published
under subsection (e)(5)(A) for fiscal year 2001, a description of the
effect of this subparagraph. The Secretary may include in the proposed
rule (and in the final rule published under paragraph (6)) for fiscal
year 2001 or a subsequent fiscal year, a description of--
``(I) post-discharge services not described in subclauses
(I), (II), and (III) of clause (ii), the receipt of which
results in a qualified discharge; and
``(II) diagnosis-related groups described in clause (iii)(I)
in addition to the 10 selected under such clause.''.
[[Page 111 STAT. 402]]
SEC. 4408. RECLASSIFICATION OF CERTAIN COUNTIES AS LARGE URBAN AREAS
UNDER MEDICARE PROGRAM.
(a) In General.--For purposes of section 1886(d) of the Social
Security Act (42 U.S.C. 1395ww(d)), the large urban area of Charlotte-
Gastonia-Rock Hill-North Carolina-South Carolina may be deemed to
include Stanly County, North Carolina.
(b) Effective Date.--This section shall apply with respect to
discharges occurring on or after October 1, 1997.
<<NOTE: 42 USC 1395ww note.>> SEC. 4409. GEOGRAPHIC RECLASSIFICATION FOR
CERTAIN DISPROPORTIONATELY LARGE HOSPITALS.
<<NOTE: Publication.>> (a) New Guidelines for Reclassification.--
Notwithstanding the guidelines published under section
1886(d)(10)(D)(i)(I) of the Social Security Act (42 U.S.C.
1395ww(d)(10)(D)(i)(I)), the Secretary of Health and Human Services
shall publish and use alternative guidelines under which a hospital
described in subsection (b) qualifies for geographic reclassification
under such section for a fiscal year beginning with fiscal year 1998.
(b) Hospitals Covered.--A hospital described in this subsection is a
hospital that demonstrates that--
(1) the average hourly wage paid by the hospital is not less
than 108 percent of the average hourly wage paid by all other
hospitals located in the Metropolitan Statistical Area (or the
New England County Metropolitan Area) in which the hospital is
located;
(2) not less than 40 percent of the adjusted uninflated
wages paid by all hospitals located in such Area is attributable
to wages paid by the hospital; and
(3) the hospital submitted an application requesting
reclassification for purposes of wage index under section
1886(d)(10)(C) of such Act (42 U.S.C. 1395ww(d)(10)(C)) in each
of fiscal years 1992 through 1997 and that such request was
approved for each of such fiscal years.
<<NOTE: 42 USC 1395ww note.>> SEC. 4410. FLOOR ON AREA WAGE INDEX.
(a) In General.--For purposes of section 1886(d)(3)(E) of the Social
Security Act (42 U.S.C. 1395ww(d)(3)(E)) for discharges occurring on or
after October 1, 1997, the area wage index applicable under such section
to any hospital which is not located in a rural area (as defined in
section 1886(d)(2)(D) of such Act (42 U.S.C. 1395ww(d)(2)(D)) may not be
less than the area wage index applicable under such section to hospitals
located in rural areas in the State in which the hospital is located.
(b) Implementation.--The Secretary of Health and Human Services
shall adjust the area wage index referred to in subsection (a) for
hospitals not described in such subsection in a manner which assures
that the aggregate payments made under section 1886(d) of the Social
Security Act (42 U.S.C. 1395ww(d)) in a fiscal year for the operating
costs of inpatient hospital services are not greater or less than those
which would have been made in the year if this section did not apply.
(c) Exclusion of Certain Wages.--In the case of a hospital that is
owned by a municipality and that was reclassified as an urban hospital
under section 1886(d)(10) of the Social Security Act for fiscal year
1996, in calculating the hospital's average hourly wage for purposes of
geographic reclassification under such section for fiscal year 1998, the
Secretary of Health and Human Services
[[Page 111 STAT. 403]]
shall exclude the general service wages and hours of personnel
associated with a skilled nursing facility that is owned by the hospital
of the same municipality and that is physically separated from the
hospital to the extent that such wages and hours of such personnel are
not shared with the hospital and are separately documented. A hospital
that applied for and was denied reclassification as an urban hospital
for fiscal year 1998, but that would have received reclassification had
the exclusion required by this section been applied to it, shall be
reclassified as an urban hospital for fiscal year 1998.
CHAPTER 2--PAYMENT OF PPS-EXEMPT HOSPITALS
Subchapter A--General Payment Provisions
SEC. 4411. PAYMENT UPDATE.
(a) In General.--Section 1886(b)(3)(B) (42 U.S.C. 1395ww(b)(3)(B))
is amended--
(1) in clause (ii)--
(A) by striking ``and'' at the end of subclause (V),
(B) by redesignating subclause (VI) as subclause
(VIII); and
(C) by inserting after subclause (V), the following
subclauses:
``(VI) for fiscal year 1998, is 0 percent;
``(VII) for fiscal years 1999 through 2002, is the
applicable update factor specified under clause (vi) for the
fiscal year; and''; and
(2) by adding at the end the following new clause:
``(vi) For purposes of clause (ii)(VII) for a fiscal year, if a
hospital's allowable operating costs of inpatient hospital services
recognized under this title for the most recent cost reporting period
for which information is available--
``(I) is equal to, or exceeds, 110 percent of the hospital's
target amount (as determined under subparagraph (A)) for such
cost reporting period, the applicable update factor specified
under this clause is the market basket percentage;
``(II) exceeds 100 percent, but is less than 110 percent, of
such target amount for the hospital, the applicable update
factor specified under this clause is 0 percent or, if greater,
the market basket percentage minus 0.25 percentage points for
each percentage point by which such allowable operating costs
(expressed as a percentage of such target amount) is less than
110 percent of such target amount;
``(III) is equal to, or less than 100 percent, but exceeds
\2/3\ of such target amount for the hospital, the applicable
update factor specified under this clause is 0 percent or, if
greater, the market basket percentage minus 2.5 percentage
points; or
``(IV) does not exceed \2/3\ of such target amount for the
hospital, the applicable update factor specified under this
clause is 0 percent.''.
(b) No Effect of Payment Reduction on Exceptions and Adjustments.--
Section 1886(b)(4)(A)(ii) (42 U.S.C. 1395ww(b)(4)(A)(ii)) is amended by
adding at the end the following new sentence: ``In making such
reductions, the Secretary shall treat the applicable update factor
described in paragraph (3)(B)(vi)
[[Page 111 STAT. 404]]
for a fiscal year as being equal to the market basket percentage for
that year.''.
SEC. 4412. REDUCTIONS TO CAPITAL PAYMENTS FOR CERTAIN PPS-EXEMPT
HOSPITALS AND UNITS.
Section 1886(g) (42 U.S.C. 1395ww(g)) is amended by adding at the
end the following new paragraph:
``(4) In determining the amount of the payments that are
attributable to portions of cost reporting periods occurring during
fiscal years 1998 through 2002 and that may be made under this title
with respect to capital-related costs of inpatient hospital services of
a hospital which is described in clause (i), (ii), or (iv) of subsection
(d)(1)(B) or a unit described in the matter after clause (v) of such
subsection, the Secretary shall reduce the amounts of such payments
otherwise determined under this title by 15 percent.''.
SEC. 4413. REBASING.
(a) Option of Rebasing for Hospitals In Operation Before 1990.--
Section 1886(b)(3)(42 U.S.C. 1395ww(b)(3)) is amended--
(1) in subparagraph (A) by striking ``subparagraphs (C),
(D), and (E)'' and inserting ``subparagraph (C) and succeeding
subparagraphs'', and
(2) by adding at the end the following new subparagraph:
``(F)(i) In the case of a hospital (or unit described in the matter
following clause (v) of subsection (d)(1)(B)) that received payment
under this subsection for inpatient hospital services furnished during
cost reporting periods beginning before October 1, 1990, that is within
a class of hospital described in clause (iii), and that elects (in a
form and manner determined by the Secretary) this subparagraph to apply
to the hospital, the target amount for the hospital's 12-month cost
reporting period beginning during fiscal year 1998 is equal to the
average described in clause (ii).
``(ii) The average described in this clause for a hospital or unit
shall be determined by the Secretary as follows:
``(I) The Secretary shall determine the allowable operating
costs for inpatient hospital services for the hospital or unit
for each of the 5 cost reporting periods for which the Secretary
has the most recent settled cost reports as of the date of the
enactment of this subparagraph.
``(II) The Secretary shall increase the amount determined
under subclause (I) for each cost reporting period by the
applicable percentage increase under subparagraph (B)(ii) for
each subsequent cost reporting period up to the cost reporting
period described in clause (i).
``(III) The Secretary shall identify among such 5 cost
reporting periods the cost reporting periods for which the
amount determined under subclause (II) is the highest, and the
lowest.
``(IV) The Secretary shall compute the averages of the
amounts determined under subclause (II) for the 3 cost reporting
periods not identified under subclause (III).
``(iii) For purposes of this subparagraph, each of the following
shall be treated as a separate class of hospital:
``(I) Hospitals described in clause (i) of subsection
(d)(1)(B) and psychiatric units described in the matter
following clause (v) of such subsection.
``(II) Hospitals described in clause (ii) of such subsection
and rehabilitation units described in the matter following
clause (v) of such subsection.
[[Page 111 STAT. 405]]
``(III) Hospitals described in clause (iii) of such
subsection.
``(IV) Hospitals described in clause (iv) of such
subsection.
``(V) Hospitals described in clause (v) of such
subsection.''.
(b) Certain Long-Term Care Hospitals.--Section 1886(b)(3) (42 U.S.C.
1395ww(b)(3)), as amended by subsection (a), is amended by adding at the
end the following new subparagraph:
``(G)(i) In the case of a qualified long-term care hospital (as
defined in clause (ii)) that elects (in a form and manner determined by
the Secretary) this subparagraph to apply to the hospital, the target
amount for the hospital's 12-month cost reporting period beginning
during fiscal year 1998 is equal to the allowable operating costs of
inpatient hospital services (as defined in subsection (a)(4)) recognized
under this title for the hospital for the 12-month cost reporting period
beginning during fiscal year 1996, increased by the applicable
percentage increase for the cost reporting period beginning during
fiscal year 1997.
``(ii) In clause (i), a `qualified long-term care hospital' means,
with respect to a cost reporting period, a hospital described in clause
(iv) of subsection (d)(1)(B) during each of the 2 cost reporting periods
for which the Secretary has the most recent settled cost reports as of
the date of the enactment of this subparagraph for each of which--
``(I) the hospital's allowable operating costs of inpatient
hospital services recognized under this title exceeded 115
percent of the hospital's target amount, and
``(II) the hospital would have a disproportionate patient
percentage of at least 70 percent (as determined by the
Secretary under subsection (d)(5)(F)(vi)) if the hospital were a
subsection (d) hospital.''.
SEC. 4414. CAP ON TEFRA LIMITS.
Section 1886(b)(3) (42 U.S.C. 1395ww(b)(3)), as amended by section
4413, is amended by adding at the end the following new subparagraph:
``(H)(i) In the case of a hospital or unit that is within a class of
hospital described in clause (iv), the Secretary shall estimate the 75th
percentile of the target amounts for such hospitals within such class
for cost reporting periods ending during fiscal year 1996.
``(ii) The Secretary shall update the amount determined under clause
(i), for each cost reporting period after the cost reporting period
described in such clause and up to the first cost reporting period
beginning on or after October 1, 1997, by a factor equal to the market
basket percentage increase.
``(iii) For cost reporting periods beginning during each of fiscal
years 1999 through 2002, the Secretary shall update such amount by a
factor equal to the market basket percentage increase.
``(iv) For purposes of this subparagraph, each of the following
shall be treated as a separate class of hospital:
``(I) Hospitals described in clause (i) of subsection
(d)(1)(B) and psychiatric units described in the matter
following clause (v) of such subsection.
``(II) Hospitals described in clause (ii) of such subsection
and rehabilitation units described in the matter following
clause (v) of such subsection.
``(III) Hospitals described in clause (iv) of such
subsection.''.
[[Page 111 STAT. 406]]
SEC. 4415. BONUS AND RELIEF PAYMENTS.
(a) Change in Bonus Payment.--Section 1886(b)(1) (42 U.S.C.
1395ww(b)(1)) is amended in subparagraph (A) by striking all that
follows ``plus--'' and inserting the following:
``(i) 15 percent of the amount by which the target
amount exceeds the amount of the operating costs, or
``(ii) 2 percent of the target amount,
whichever is less;''.
(b) Continuous Improvement Bonus Payments.--Section 1886(b) (42
U.S.C. 1395ww(b)) is amended--
(1) in paragraph (1), by inserting ``plus the amount, if
any, provided under paragraph (2)'' before ``except that in no
case''; and
(2) by inserting after paragraph (1), the following new
paragraph:
``(2)(A) In addition to the payment computed under paragraph (1), in
the case of an eligible hospital (described in subparagraph (B)) for a
cost reporting period beginning on or after October 1, 1997, the amount
of payment on a per discharge basis under paragraph (1) shall be
increased by the lesser of--
``(i) 50 percent of the amount by which the operating costs
are less than the expected costs (as defined in subparagraph
(D)) for the period; or
``(ii) 1 percent of the target amount for the period.
``(B) For purposes of this paragraph, an `eligible hospital' means
with respect to a cost reporting period, a hospital--
``(i) that has received payments under this subsection for
at least 3 full cost reporting periods before that cost
reporting period, and
``(ii) whose operating costs for the period are less than
the least of its target amount, its trended costs (as defined in
subparagraph (C)), or its expected costs (as defined in
subparagraph (D)) for the period.
``(C) For purposes of subparagraph (B)(ii), the term `trended costs'
means for a hospital cost reporting period ending in a fiscal year--
``(i) in the case of a hospital for which its cost reporting
period ending in fiscal year 1996 was its third or subsequent
full cost reporting period for which it receives payments under
this subsection, the lesser of the operating costs or target
amount for that hospital for its cost reporting period ending in
fiscal year 1996, or
``(ii) in the case of any other hospital, the operating
costs for that hospital for its third full cost reporting period
for which it receives payments under this subsection,
increased (in a compounded manner) for each succeeding fiscal year
(through the fiscal year involved) by the market basket percentage
increase for the fiscal year.
``(D) For purposes of this paragraph, the term `expected costs',
with respect to the cost reporting period ending in a fiscal year, means
the lesser of the operating costs of inpatient hospital services or
target amount per discharge for the previous cost reporting period
updated by the market basket percentage increase (as defined in
paragraph (3)(B)(iii)) for the fiscal year.''.
(c) Change in Relief Payments.--Section 1886(b)(1) (42 U.S.C.
1395ww(b)(1)), as amended in subsections (a) and (b), is further
amended--
[[Page 111 STAT. 407]]
(1) by redesignating subparagraph (B) as subparagraph (C)
(2) in subparagraph (C), as so redesignated--
(A) by striking ``greater than the target amount''
and inserting ``greater than 110 percent of the target
amount'', and
(B) by striking ``exceed the target amount'' and
inserting ``exceed 110 percent of the target amount'',
and
(3) by inserting after subparagraph (A), the following new
subparagraph:
``(B) are greater than the target amount but do not exceed
110 percent of the target amount, the amount of the payment with
respect to those operating costs payable under part A on a per
discharge basis shall equal the target amount; or''.
<<NOTE: 42 USC 1395ww note.>> (d) Report.--Not later than October 1,
1999, the Secretary of Health and Human Services shall submit to the
Committee on Ways and Means of the House of Representatives and the
Committee on Finance of the Senate a report that describes the effect of
the amendments to section 1886(b)(1) of the Social Security Act (42
U.S.C. 1395ww(b)(1)), made under this section, on psychiatric hospitals
(as defined in section 1886(d)(1)(B)(i) of such Act (42 U.S.C.
1395ww(d)(1)(B)(i)) that have approved medical residency training
programs under title XVIII of such Act (42 U.S.C. 1395 et seq.)).
<<NOTE: 42 USC 1395ww note.>> (e) Effective Date.--The amendments
made by subsections (a) and (c) shall apply with respect to cost
reporting periods beginning on or after October 1, 1997.
SEC. 4416. CHANGE IN PAYMENT AND TARGET AMOUNT FOR NEW PROVIDERS.
Section 1886(b) (42 U.S.C. 1395ww(b)) is amended--
(1) by adding at the end the following new paragraph:
``(7)(A) Notwithstanding paragraph (1), in the case of a hospital or
unit that is within a class of hospital described in subparagraph (B)
which first receives payments under this section on or after October 1,
1997--
``(i) for each of the first 2 cost reporting periods for
which the hospital has a settled cost report, the amount of the
payment with respect to operating costs described in paragraph
(1) under part A on a per discharge or per admission basis (as
the case may be) is equal to the lesser of--
``(I) the amount of operating costs for such
respective period, or
``(II) 110 percent of the national median of the
target amount for hospitals in the same class as the
hospital for cost reporting periods ending during fiscal
year 1996, updated by the hospital market basket
increase percentage to the fiscal year in which the
hospital first received payments under this section, as
adjusted under subparagraph (C); and
``(ii) for purposes of computing the target amount for the
subsequent cost reporting period, the target amount for the
preceding cost reporting period is equal to the amount
determined under clause (i) for such preceding period.
``(B) For purposes of this paragraph, each of the following shall be
treated as a separate class of hospital:
[[Page 111 STAT. 408]]
``(i) Hospitals described in clause (i) of subsection
(d)(1)(B) and psychiatric units described in the matter
following clause (v) of such subsection.
``(ii) Hospitals described in clause (ii) of such subsection
and rehabilitation units described in the matter following
clause (v) of such subsection.
``(iii) Hospitals described in clause (iv) of such
subsection.
``(C) In applying subparagraph (A)(i)(II) in the case of a hospital
or unit, the Secretary shall provide for an appropriate adjustment to
the labor-related portion of the amount determined under such
subparagraph to take into account differences between average wage-
related costs in the area of the hospital and the national average of
such costs within the same class of hospital.''; and
(2) in paragraph (3)(A), as amended in sections 4413 and
4414, by inserting ``and in paragraph (7)(A)(ii),'' before ``for
purposes of''.
SEC. 4417. TREATMENT OF CERTAIN LONG-TERM CARE HOSPITALS.
(a) In General.--(1) Section 1886(d)(1)(B) (42 U.S.C.
1395ww(d)(1)(B)) is amended by adding at the end the following new
sentence: ``A hospital that was classified by the Secretary on or before
September 30, 1995, as a hospital described in clause (iv) shall
continue to be so classified notwithstanding that it is located in the
same building as, or on the same campus as, another hospital.''.
<<NOTE: 42 USC 1395ww note.>> (2) Effective date.--The amendment
made by paragraph (1) shall apply to discharges occurring on or after
October 1, 1995.
(b) Certain Long-Term Care Hospitals That Treat Cancer Patients.--
(1) Section 1886(d)(1)(B)(iv) (42 U.S.C. 1395ww(d)(1)(B)(iv)) is
amended--
(A) by inserting ``(I)'' after ``(iv)''; and
(B) by adding at the end the following:
``(II) a hospital that first received payment under this
subsection in 1986 which has an average inpatient length of stay
(as determined by the Secretary) of greater than 20 days and
that has 80 percent or more of its annual medicare inpatient
discharges with a principal diagnosis that reflects a finding of
neoplastic disease in the 12-month cost reporting period ending
in fiscal year 1997, or''.
<<NOTE: 42 USC 1395ww note.>> (2) Effective date.--The amendment
made by paragraph (1) shall apply to cost reporting periods beginning on
or after the date of the enactment of this Act.
SEC. 4418. TREATMENT OF CERTAIN CANCER HOSPITALS.
(a) In General.--Section 1886(d)(1) (42 U.S.C. 1395ww(d)(1)) is
amended--
(1) in subparagraph (B)(v)--
(A) by inserting ``(I)'' after ``(v)'';
(B) by striking the semicolon at the end and
inserting ``, or''; and
(C) by adding at the end the following:
``(II) a hospital that was recognized as a comprehensive
cancer center or clinical cancer research center by the National
Cancer Institute of the National Institutes of Health as of
April 20, 1983, that is located in a State which, as of December
19, 1989, was not operating a demonstration project under
section 1814(b), that applied and was denied, on or before
December 31, 1990, for classification as a hospital involved
[[Page 111 STAT. 409]]
extensively in treatment for or research on cancer under this
clause (as in effect on the day before the date of the enactment
of this subclause), that as of the date of the enactment of this
subclause, is licensed for less than 50 acute care beds, and
that demonstrates for the 4-year period ending on December 31,
1996, that at least 50 percent of its total discharges have a
principal finding of neoplastic disease, as defined in
subparagraph (E);'' and
(2) by adding at the end the following:
``(E) For purposes of subparagraph (B)(v)(II) only, the term
`principal finding of neoplastic disease' means the condition
established after study to be chiefly responsible for occasioning the
admission of a patient to a hospital, except that only discharges with
ICD-9-CM principal diagnosis codes of 140 through 239, V58.0, V58.1,
V66.1, V66.2, or 990 will be considered to reflect such a principal
diagnosis.''.
<<NOTE: 42 USC 1395ww note.>> (b) Payment.--
(1) Application to cost reporting periods.--Any
classification by reason of section 1886(d)(1)(B)(v)(II) of the
Social Security Act (42 U.S.C. 1395ww(d)(1)(B)(v)(II)) (as added
by subsection (a)) shall apply to all cost reporting periods
beginning on or after January 1, 1991.
(2) Base year.--Notwithstanding the provisions of section
1886(b)(3)(E) of such Act (42 U.S.C. 1395ww(b)(3)(E)) or other
provisions to the contrary, the base cost reporting period for
purposes of determining the target amount for any hospital
classified by reason of section 1886(d)(1)(B)(v)(II) of such Act
shall be either--
(A) the hospital's cost reporting period beginning
during fiscal year 1990, or
(B) pursuant to an election under 1886(b)(3)(G) of
such Act (42 U.S.C. 1395ww(b)(3)(G)), as added in
section 4413(b), the period provided for under such
section.
(3) Deadline for payments.--Any payments owed to a hospital
by reason of this subsection shall be made expeditiously, but in
no event later than 1 year after the date of the enactment of
this Act.
SEC. 4419. ELIMINATION OF EXEMPTIONS FOR CERTAIN HOSPITALS.
(a) Reduction of Exemptions.--
(1) In general.--Section 1886(b)(4)(A)(i) (42 U.S.C.
1395ww(b)(4)(A)(i)) is amended in the first sentence by striking
``The Secretary shall provide for an exemption from, or an
exception and adjustment to, '' and inserting ``The Secretary
shall provide for an exception and adjustment to (and in the
case of a hospital or unit described in subsection
(d)(1)(B)(iii), may provide an exemption from)''.
<<NOTE: 42 USC 1395ww note.>> (2) Effective date.--The
amendment made by paragraph (1) shall apply to hospitals or
units that first qualify as a hospital or unit described in
section 1886(d)(1)(B) (42 U.S.C. 1395ww(d)(1)(B)) for cost
reporting periods beginning on or after October 1, 1997.
<<NOTE: Federal Register, publication. 42 USC 1395ww note.>> (b)
Report on Exceptions.--The Secretary of Health and Human Services shall
publish annually in the Federal Register a report describing the total
amount of payments made to hospitals by reason of section 1886(b)(4) of
the Social Security Act (42 U.S.C.
[[Page 111 STAT. 410]]
1395ww(b)(4)), as amended by subsection (a), ending during the previous
fiscal year.
Subchapter B--Prospective Payment System for PPS-Exempt Hospitals
SEC. 4421. PROSPECTIVE PAYMENT FOR INPATIENT REHABILITATION HOSPITAL
SERVICES.
(a) In General.--Section 1886 (42 U.S.C. 1395ww) is amended by
adding at the end the following new subsection:
``(j) Prospective Payment for Inpatient Rehabilitation Services.--
``(1) Payment during transition period.--
``(A) In general.--Notwithstanding section 1814(b),
but subject to the provisions of section 1813, the
amount of the payment with respect to the operating and
capital costs of inpatient hospital services of a
rehabilitation hospital or a rehabilitation unit (in
this subsection referred to as a `rehabilitation
facility'), in a cost reporting period beginning on or
after October 1, 2000, and before October 1, 2002, is
equal to the sum of--
``(i) the TEFRA percentage (as defined in
subparagraph (C)) of the amount that would have
been paid under part A with respect to such costs
if this subsection did not apply, and
``(ii) the prospective payment percentage (as
defined in subparagraph (C)) of the product of (I)
the per unit payment rate established under this
subsection for the fiscal year in which the
payment unit of service occurs, and (II) the
number of such payment units occurring in the cost
reporting period.
``(B) Fully implemented system.--Notwithstanding
section 1814(b), but subject to the provisions of
section 1813, the amount of the payment with respect to
the operating and capital costs of inpatient hospital
services of a rehabilitation facility for a payment unit
in a cost reporting period beginning on or after October
1, 2002, is equal to the per unit payment rate
established under this subsection for the fiscal year in
which the payment unit of service occurs.
``(C) TEFRA and prospective payment percentages
specified.--For purposes of subparagraph (A), for a cost
reporting period beginning--
``(i) on or after October 1, 2000, and before
October 1, 2001, the `TEFRA percentage' is 66\2/3\
percent and the `prospective payment percentage'
is 33\1/3\ percent; and
``(ii) on or after October 1, 2001, and before
October 1, 2002, the `TEFRA percentage' is 33\1/3\
percent and the `prospective payment percentage'
is 66\2/3\ percent.
``(D) Payment unit.--For purposes of this
subsection, the term `payment unit' means a discharge,
day of inpatient hospital services, or other unit of
payment defined by the Secretary.
``(2) Patient case mix groups.--
``(A) Establishment.--The Secretary shall
establish--
[[Page 111 STAT. 411]]
``(i) classes of patients of rehabilitation
facilities (each in this subsection referred to as
a `case mix group'), based on such factors as the
Secretary deems appropriate, which may include
impairment, age, related prior hospitalization,
comorbidities, and functional capability of the
patient; and
``(ii) a method of classifying specific
patients in rehabilitation facilities within these
groups.
``(B) Weighting factors.--For each case mix group
the Secretary shall assign an appropriate weighting
which reflects the relative facility resources used with
respect to patients classified within that group
compared to patients classified within other groups.
``(C) Adjustments for case mix.--
``(i) In general.--The Secretary shall from
time to time adjust the classifications and
weighting factors established under this paragraph
as appropriate to reflect changes in treatment
patterns, technology, case mix, number of payment
units for which payment is made under this title,
and other factors which may affect the relative
use of resources. Such adjustments shall be made
in a manner so that changes in aggregate payments
under the classification system are a result of
real changes and are not a result of changes in
coding that are unrelated to real changes in case
mix.
``(ii) Adjustment.--Insofar as the Secretary
determines that such adjustments for a previous
fiscal year (or estimates that such adjustments
for a future fiscal year) did (or are likely to)
result in a change in aggregate payments under the
classification system during the fiscal year that
are a result of changes in the coding or
classification of patients that do not reflect
real changes in case mix, the Secretary shall
adjust the per payment unit payment rate for
subsequent years so as to eliminate the effect of
such coding or classification changes.
``(D) Data collection.--The Secretary is authorized
to require rehabilitation facilities that provide
inpatient hospital services to submit such data as the
Secretary deems necessary to establish and administer
the prospective payment system under this subsection.
``(3) Payment rate.--
``(A) In general.--The Secretary shall determine a
prospective payment rate for each payment unit for which
such rehabilitation facility is entitled to receive
payment under this title. Subject to subparagraph (B),
such rate for payment units occurring during a fiscal
year shall be based on the average payment per payment
unit under this title for inpatient operating and
capital costs of rehabilitation facilities using the
most recent data available (as estimated by the
Secretary as of the date of establishment of the system)
adjusted--
``(i) by updating such per-payment-unit amount
to the fiscal year involved by the weighted
average of the applicable percentage increases
provided under subsection (b)(3)(B)(ii) (for cost
reporting periods beginning during the fiscal
year) covering the period from
[[Page 111 STAT. 412]]
the midpoint of the period for such data through
the midpoint of fiscal year 2000 and by an
increase factor (described in subparagraph (C))
specified by the Secretary for subsequent fiscal
years up to the fiscal year involved;
``(ii) by reducing such rates by a factor
equal to the proportion of payments under this
subsection (as estimated by the Secretary) based
on prospective payment amounts which are
additional payments described in paragraph (4)
(relating to outlier and related payments);
``(iii) for variations among rehabilitation
facilities by area under paragraph (6);
``(iv) by the weighting factors established
under paragraph (2)(B); and
``(v) by such other factors as the Secretary
determines are necessary to properly reflect
variations in necessary costs of treatment among
rehabilitation facilities.
``(B) Budget neutral rates.--The Secretary shall
establish the prospective payment amounts under this
subsection for payment units during fiscal years 2001
and 2002 at levels such that, in the Secretary's
estimation, the amount of total payments under this
subsection for such fiscal years (including any payment
adjustments pursuant to paragraphs (4) and (6)) shall be
equal to 98 percent of the amount of payments that would
have been made under this title during the fiscal years
for operating and capital costs of rehabilitation
facilities had this subsection not been enacted. In
establishing such payment amounts, the Secretary shall
consider the effects of the prospective payment system
established under this subsection on the total number of
payment units from rehabilitation facilities and other
factors described in subparagraph (A).
``(C) Increase factor.--For purposes of this
subsection for payment units in each fiscal year
(beginning with fiscal year 2001), the Secretary shall
establish an increase factor. Such factor shall be based
on an appropriate percentage increase in a market basket
of goods and services comprising services for which
payment is made under this subsection, which may be the
market basket percentage increase described in
subsection (b)(3)(B)(iii).
``(4) Outlier and special payments.--
``(A) Outliers.--
``(i) In general.--The Secretary may provide
for an additional payment to a rehabilitation
facility for patients in a case mix group, based
upon the patient being classified as an outlier
based on an unusual length of stay, costs, or
other factors specified by the Secretary.
``(ii) Payment based on marginal cost of
care.--The amount of such additional payment under
clause (i) shall be determined by the Secretary
and shall approximate the marginal cost of care
beyond the cutoff point applicable under clause
(i).
[[Page 111 STAT. 413]]
``(iii) Total payments.--The total amount of
the additional payments made under this
subparagraph for payment units in a fiscal year
may not exceed 5 percent of the total payments
projected or estimated to be made based on
prospective payment rates for payment units in
that year.
``(B) Adjustment.--The Secretary may provide for
such adjustments to the payment amounts under this
subsection as the Secretary deems appropriate to take
into account the unique circumstances of rehabilitation
facilities located in Alaska and Hawaii.
<<NOTE: Federal Register, publication.>> ``(5)
Publication.--The Secretary shall provide for publication in the
Federal Register, on or before August 1 before each fiscal year
(beginning with fiscal year 2001), of the classification and
weighting factors for case mix groups under paragraph (2) for
such fiscal year and a description of the methodology and data
used in computing the prospective payment rates under this
subsection for that fiscal year.
``(6) Area wage adjustment.--The Secretary shall adjust the
proportion (as estimated by the Secretary from time to time) of
rehabilitation facilities' costs which are attributable to wages
and wage-related costs, of the prospective payment rates
computed under paragraph (3) for area differences in wage levels
by a factor (established by the Secretary) reflecting the
relative hospital wage level in the geographic area of the
rehabilitation facility compared to the national average wage
level for such facilities. Not later than October 1, 2001 (and
at least every 36 months thereafter), the Secretary shall update
the factor under the preceding sentence on the basis of
information available to the Secretary (and updated as
appropriate) of the wages and wage-related costs incurred in
furnishing rehabilitation services. Any adjustments or updates
made under this paragraph for a fiscal year shall be made in a
manner that assures that the aggregated payments under this
subsection in the fiscal year are not greater or less than those
that would have been made in the year without such adjustment.
``(7) Limitation on review.--There shall be no
administrative or judicial review under section 1869, 1878, or
otherwise of the establishment of--
``(A) case mix groups, of the methodology for the
classification of patients within such groups, and of
the appropriate weighting factors thereof under
paragraph (2),
``(B) the prospective payment rates under paragraph
(3),
``(C) outlier and special payments under paragraph
(4), and
``(D) area wage adjustments under paragraph (6).''.
(b) Conforming Amendments.--Section 1886(b) (42 U.S.C. 1395ww(b)) is
amended--
(1) in paragraph (1), by inserting ``and other than a
rehabilitation facility described in subsection (j)(1)'' after
``subsection (d)(1)(B)'', and
(2) in paragraph (3)(B)(i), by inserting ``and subsection
(j)'' after ``For purposes of subsection (d)''.
<<NOTE: 42 USC 1395 note.>> (c) Effective Date.--The amendments made
by this section shall apply to cost reporting periods beginning on or
after October
[[Page 111 STAT. 414]]
1, 2000, except that the Secretary of Health and Human Services may
require the submission of data under section 1886(j)(2)(D) of the Social
Security Act (as added by subsection (a)) on and after the date of the
enactment of this section.
<<NOTE: 42 USC 1395ww note.>> SEC. 4422. DEVELOPMENT OF PROPOSAL ON
PAYMENTS FOR LONG-TERM CARE HOSPITALS.
(a) In General.--
(1) Legislative proposal.--The Secretary of Health and Human
Services shall develop a legislative proposal for establishing a
case-mix adjusted prospective payment system for payment of
long-term care hospitals described in section 1886(d)(1)(B)(iv)
of the Social Security Act (42 U.S.C. 1395ww(d)(1)(B)(iv)) under
the medicare program. Such system shall include an adequate
patient classification system that reflects the differences in
patient resource use and costs among such hospitals.
(2) Collection of data and evaluation.--In developing the
legislative proposal described in paragraph (1), the Secretary--
(A) may require such long-term care hospitals to
submit such information to the Secretary as the
Secretary may require to develop the proposal; and
(B) shall consider several payment methodologies,
including the feasibility of expanding the current
diagnosis-related groups and prospective payment system
established under section 1886(d) of the Social Security
Act to apply to payments under the medicare program to
long-term care hospitals.
(b) Report.--Not later than October 1, 1999, the Secretary shall
submit to the appropriate committees of Congress a report that includes
the legislative proposal developed under subsection (a)(1).
CHAPTER 3--PAYMENT FOR SKILLED NURSING FACILITIES
SEC. 4431. EXTENSION OF COST LIMITS.
The last sentence of section 1888(a) (42 U.S.C. 1395yy(a)) is
amended by striking ``subsection'' the last place it appears and all
that follows and inserting ``subsection, except that the limits
effective for cost reporting periods beginning on or after October 1,
1997, shall be based on the limits effective for cost reporting periods
beginning on or after October 1, 1996.''.
SEC. 4432. PROSPECTIVE PAYMENT FOR SKILLED NURSING FACILITY SERVICES.
(a) In General.--Section 1888 (42 U.S.C. 1395yy) is amended by
adding at the end the following new subsection:
``(e) Prospective Payment.--
``(1) Payment provision.--Notwithstanding any other
provision of this title, subject to paragraph (7), the amount of
the payment for all costs (as defined in paragraph (2)(B)) of
covered skilled nursing facility services (as defined in
paragraph (2)(A)) for each day of such services furnished--
``(A) in a cost reporting period during the
transition period (as defined in paragraph (2)(E)), is
equal to the sum of--
[[Page 111 STAT. 415]]
``(i) the non-Federal percentage of the
facility-specific per diem rate (computed under
paragraph (3)), and
``(ii) the Federal percentage of the adjusted
Federal per diem rate (determined under paragraph
(4)) applicable to the facility; and
``(B) after the transition period is equal to the
adjusted Federal per diem rate applicable to the
facility.
``(2) Definitions.--For purposes of this subsection:
``(A) Covered skilled nursing facility services.--
``(i) In general.--The term `covered skilled
nursing facility services'--
``(I) means post-hospital extended
care services as defined in section
1861(i) for which benefits are provided
under part A; and
``(II) includes all items and
services (other than services described
in clause (ii)) for which payment may be
made under part B and which are
furnished to an individual who is a
resident of a skilled nursing facility
during the period in which the
individual is provided covered post-
hospital extended care services.
``(ii) Services excluded.--Services described
in this clause are physicians' services, services
described by clauses (i) through (iii) of section
1861(s)(2)(K), certified nurse-midwife services,
qualified psychologist services, services of a
certified registered nurse anesthetist, items and
services described in subparagraphs (F) and (O) of
section 1861(s)(2), and, only with respect to
services furnished during 1998, the transportation
costs of electrocardiogram equipment for
electrocardiogram test services (HCPCS Code
R0076). Services described in this clause do not
include any physical, occupational, or speech-
language therapy services regardless of whether or
not the services are furnished by, or under the
supervision of, a physician or other health care
professional.
``(B) All costs.--The term `all costs' means routine
service costs, ancillary costs, and capital-related
costs of covered skilled nursing facility services, but
does not include costs associated with approved
educational activities.
``(C) Non-federal percentage; federal percentage.--
For--
``(i) the first cost reporting period (as
defined in subparagraph (D)) of a facility, the
`non-Federal percentage' is 75 percent and the
`Federal percentage' is 25 percent;
``(ii) the next cost reporting period of such
facility, the `non-Federal percentage' is 50
percent and the `Federal percentage' is 50
percent; and
``(iii) the subsequent cost reporting period
of such facility, the `non-Federal percentage' is
25 percent and the `Federal percentage' is 75
percent.
[[Page 111 STAT. 416]]
``(D) First cost reporting period.--The term `first
cost reporting period' means, with respect to a skilled
nursing facility, the first cost reporting period of the
facility beginning on or after July 1, 1998.
``(E) Transition period.--
``(i) In general.--The term `transition
period' means, with respect to a skilled nursing
facility, the 3 cost reporting periods of the
facility beginning with the first cost reporting
period.
``(ii) Treatment of new skilled nursing
facilities.--In the case of a skilled nursing
facility that first received payment for services
under this title on or after October 1, 1995,
payment for such services shall be made under this
subsection as if all services were furnished after
the transition period.
``(3) Determination of facility specific per diem rates.--
The Secretary shall determine a facility-specific per diem rate
for each skilled nursing facility not described in paragraph
(2)(E)(ii) for a cost reporting period as follows:
``(A) Determining base payments.--The Secretary
shall determine, on a per diem basis, the total of--
``(i) the allowable costs of extended care
services for the facility for cost reporting
periods beginning in fiscal year 1995, including
costs associated with facilities described in
subsection (d), with appropriate adjustments (as
determined by the Secretary) to non-settled cost
reports, and
``(ii) an estimate of the amounts that would
be payable under part B (disregarding any
applicable deductibles, coinsurance, and
copayments) for covered skilled nursing facility
services described in paragraph (2)(A)(i)(II)
furnished during such period to an individual who
is a resident of the facility, regardless of
whether or not the payment was made to the
facility or to another entity.
In making appropriate adjustments under clause (i), the
Secretary shall take into account exceptions and shall
take into account exemptions but, with respect to
exemptions, only to the extent that routine costs do not
exceed 150 percent of the routine cost limits otherwise
applicable but for the exemption.
``(B) Update to first cost reporting period.--
``(i) In general.--Subject to clause (ii), the
Secretary shall update the amount determined under
subparagraph (A), for each cost reporting period
after the cost reporting period described in
subparagraph (A)(i) and up to the first cost
reporting period by a factor equal to the skilled
nursing facility market basket percentage increase
minus 1 percentage point.
``(ii) Certain demonstration projects.--In the
case of a facility participating in the Nursing
Home Case-Mix and Quality Demonstration (RUGS-
III), there shall be substituted for the amount
described in clause (i) the RUGS-III rate received
by the facility for 1997.
[[Page 111 STAT. 417]]
``(C) Updating to applicable cost reporting
period.--The Secretary shall update the amount
determined under subparagraph (B) for each cost
reporting period beginning with the first cost reporting
period and up to and including the cost reporting period
involved by a factor equal to the facility-specific
update factor.
``(D) Facility-specific update factor.--For purposes
of this paragraph, the `facility-specific update factor'
for cost reporting periods beginning during--
``(i) during each of fiscal years 1998 and
1999, is equal to the skilled nursing facility
market basket percentage increase for such fiscal
year minus 1 percentage point, and
``(ii) during each subsequent fiscal year is
equal to the skilled nursing facility market
basket percentage increase for such fiscal year.
``(4) Federal per diem rate.--
``(A) Determination of historical per diem for
facilities.--For each skilled nursing facility that
received payments for post-hospital extended care
services during a cost reporting period beginning in
fiscal year 1995 and that was subject to (and not
exempted from) the per diem limits referred to in
paragraph (1) or (2) of subsection (a) (and facilities
described in subsection (d)), the Secretary shall
estimate, on a per diem basis for such cost reporting
period, the total of--
``(i) the allowable costs of extended care
services (excluding exceptions payments) for the
facility for cost reporting periods beginning in
1995 with appropriate adjustments (as determined
by the Secretary) to non-settled cost reports, and
``(ii) an estimate of the amounts that would
be payable under part B (disregarding any
applicable deductibles, coinsurance, and
copayments) for covered skilled nursing facility
services described in paragraph (2)(A)(i)(II)
furnished during such period to an individual who
is a resident of the facility, regardless of
whether or not the payment was made to the
facility or to another entity.
``(B) Update to first fiscal year.--The Secretary
shall update the amount determined under subparagraph
(A), for each cost reporting period after the cost
reporting period described in subparagraph (A)(i) and up
to the first cost reporting period by a factor equal to
the skilled nursing facility market basket percentage
increase reduced (on an annualized basis) by 1
percentage point.
``(C) Computation of standardized per diem rate.--
The Secretary shall standardize the amount updated under
subparagraph (B) for each facility by--
``(i) adjusting for variations among
facilities by area in the average facility wage
level per diem, and
``(ii) adjusting for variations in case mix
per diem among facilities.
``(D) Computation of weighted average per diem
rates.--
``(i) All facilities.--The Secretary shall
compute a weighted average per diem rate for all
facilities by
[[Page 111 STAT. 418]]
computing an average of the standardized amounts
computed under subparagraph (C), weighted for each
facility by the number of days of extended care
services furnished during the cost reporting
period referred to in subparagraph (A).
``(ii) Freestanding facilities.--The Secretary
shall compute a weighted average per diem rate for
freestanding facilities by computing an average of
the standardized amounts computed under
subparagraph (C) only for such facilities ,
weighted for each facility by the number of days
of extended care services furnished during the
cost reporting period referred to in subparagraph
(A).
``(iii) Separate computation.--The Secretary
may compute and apply such averages separately for
facilities located in urban and rural areas (as
defined in section 1886(d)(2)(D)).
``(E) Updating.--
``(i) Initial period.--For the initial period
beginning on July 1, 1998, and ending on September
30, 1999, the Secretary shall compute for skilled
nursing facilities an unadjusted federal per diem
rate equal to the average of the weighted average
per diem rates computed under clauses (i) and (ii)
of subparagraph (D), increased by skilled nursing
facility market basket percentage change for such
period minus 1 percentage point.
``(ii) Subsequent fiscal years.--The Secretary
shall compute an unadjusted federal per diem rate
equal to the federal per diem rate computed under
this subparagraph--
``(I) for fiscal year 2000, the rate
computed for the initial period
described in clause (i), increased by
the skilled nursing facility market
basket percentage change for the initial
period minus 1 percentage point;
``(II) for each of fiscal years 2001
and 2002, the rate computed for the
previous fiscal year increased by the
skilled nursing facility market basket
percentage change for the fiscal year
involved minus 1 percentage point; and
``(III) for each subsequent fiscal
year, the rate computed for the previous
fiscal year increased by the skilled
nursing facility market basket
percentage change for the fiscal year
involved.
``(F) Adjustment for case mix creep.--Insofar as the
Secretary determines that the adjustments under
subparagraph (G)(i) for a previous fiscal year (or
estimates that such adjustments for a future fiscal
year) did (or are likely to) result in a change in
aggregate payments under this subsection during the
fiscal year that are a result of changes in the coding
or classification of residents that do not reflect real
changes in case mix, the Secretary may adjust unadjusted
Federal per diem rates for subsequent fiscal years so as
to eliminate the effect of such coding or classification
changes.
[[Page 111 STAT. 419]]
``(G) Determination of federal rate.--The Secretary
shall compute for each skilled nursing facility for each
fiscal year (beginning with the initial period described
in subparagraph (E)(i)) an adjusted Federal per diem
rate equal to the unadjusted Federal per diem rate
determined under subparagraph (E), as adjusted under
subparagraph (F), and as further adjusted as follows:
``(i) Adjustment for case mix.--The Secretary
shall provide for an appropriate adjustment to
account for case mix. Such adjustment shall be
based on a resident classification system,
established by the Secretary, that accounts for
the relative resource utilization of different
patient types. The case mix adjustment shall be
based on resident assessment data and other data
that the Secretary considers appropriate.
``(ii) Adjustment for geographic variations in
labor costs.--The Secretary shall adjust the
portion of such per diem rate attributable to
wages and wage-related costs for the area in which
the facility is located compared to the national
average of such costs using an appropriate wage
index as determined by the Secretary. Such
adjustment shall be done in a manner that does not
result in aggregate payments under this subsection
that are greater or less than those that would
otherwise be made if such adjustment had not been
made.
<<NOTE: Federal Register, publication.>> ``(H)
Publication of information on per diem rates.--The
Secretary shall provide for publication in the Federal
Register, before May 1, 1998 (with respect to fiscal
period described in subparagraph (E)(i)) and before the
August 1 preceding each succeeding fiscal year (with
respect to that succeeding fiscal year), of--
``(i) the unadjusted Federal per diem rates to
be applied to days of covered skilled nursing
facility services furnished during the fiscal
year,
``(ii) the case mix classification system to
be applied under subparagraph (G)(i) with respect
to such services during the fiscal year, and
``(iii) the factors to be applied in making
the area wage adjustment under subparagraph
(G)(ii) with respect to such services.
``(5) Skilled nursing facility market basket index and
percentage.--For purposes of this subsection:
``(A) Skilled nursing facility market basket
index.--The Secretary shall establish a skilled nursing
facility market basket index that reflects changes over
time in the prices of an appropriate mix of goods and
services included in covered skilled nursing facility
services.
``(B) Skilled nursing facility market basket
percentage.--The term `skilled nursing facility market
basket percentage' means, for a fiscal year or other
annual period and as calculated by the Secretary, the
percentage change in the skilled nursing facility market
basket index (established under subparagraph (A)) from
the midpoint of the prior fiscal year (or period) to the
midpoint of the fiscal year (or other period) involved.
[[Page 111 STAT. 420]]
``(6) Submission of resident assessment data.--A skilled
nursing facility, or a facility described in paragraph (7)(B),
shall provide the Secretary, in a manner and within the
timeframes prescribed by the Secretary, the resident assessment
data necessary to develop and implement the rates under this
subsection. For purposes of meeting such requirement, a skilled
nursing facility, or a facility described in paragraph (7), may
submit the resident assessment data required under section
1819(b)(3), using the standard instrument designated by the
State under section 1819(e)(5).
``(7) Transition for medicare swing bed hospitals.--
``(A) In general.--The Secretary shall determine an
appropriate manner in which to apply this subsection to
the facilities described in subparagraph (B), taking
into account the purposes of this subsection, and shall
provide that at the end of the transition period (as
defined in paragraph (2)(E)) such facilities shall be
paid only under this subsection. Payment shall not be
made under this subsection to such facilities for cost
reporting periods beginning before such date (not
earlier than July 1, 1999) as the Secretary specifies.
``(B) Facilities described.--The facilities
described in this subparagraph are facilities that have
in effect an agreement described in section 1883, for
which payment is made for the furnishing of extended
care services on a reasonable cost basis under section
1814(l) (as in effect on and after such date).
``(8) Limitation on review.--There shall be no
administrative or judicial review under section 1869, 1878, or
otherwise of--
``(A) the establishment of Federal per diem rates
under paragraph (4), including the computation of the
standardized per diem rates under paragraph (4)(C),
adjustments and corrections for case mix under
paragraphs (4)(F) and (4)(G)(i), and adjustments for
variations in labor-related costs under paragraph
(4)(G)(ii);
``(B) the establishment of facility specific rates
before January 1, 1999, (except any determination of
costs paid under part A of this title); and
``(C) the establishment of transitional amounts
under paragraph (7).''.
(b) Consolidated Billing.--
(1) For snf services.--Section 1862(a) (42 U.S.C. 1395y(a)),
as amended by 4319(b), is amended--
(A) by striking ``or'' at the end of paragraph (16),
(B) by striking the period at the end of paragraph
(17) and inserting ``; or'', and
(C) by inserting after paragraph (17) the following
new paragraph:
``(18) which are covered skilled nursing facility services
described in section 1888(e)(2)(A)(i) and which are furnished to
an individual who is a resident of a skilled nursing facility or
of a part of a facility that includes a skilled nursing facility
(as determined under regulations), by an entity other than the
skilled nursing facility, unless the services are furnished
under arrangements (as defined in section 1861(w)(1)) with the
entity made by the skilled nursing facility.''.
[[Page 111 STAT. 421]]
(2) Requiring payment for all part b items and services to
be made to facility.--The first sentence of section 1842(b)(6)
(42 U.S.C. 1395u(b)(6)) is amended--
(A) by striking ``and (D)'' and inserting ``(D)'';
and
(B) by striking the period at the end and inserting
the following: ``, and (E) in the case of an item or
service (other than services described in section
1888(e)(2)(A)(ii)) furnished to an individual who (at
the time the item or service is furnished) is a resident
of a skilled nursing facility or of a part of a facility
that includes a skilled nursing facility (as determined
under regulations), payment shall be made to the
facility (without regard to whether or not the item or
service was furnished by the facility, by others under
arrangement with them made by the facility, under any
other contracting or consulting arrangement, or
otherwise).''.
(3) Payment rules.--Section 1888(e) (42 U.S.C. 1395yy(e)),
as added by subsection (a), is amended by adding at the end the
following:
``(9) Payment for certain services.--In the case of an item
or service furnished to a resident of a skilled nursing facility
or a part of a facility that includes a skilled nursing facility
(as determined under regulations) for which payment would (but
for this paragraph) be made under part B in an amount determined
in accordance with section 1833(a)(2)(B), the amount of the
payment under such part shall be the amount provided under the
fee schedule for such item or service.
``(10) Required coding.--No payment may be made under part B
for items and services (other than services described in
paragraph (2)(A)(ii)) furnished to an individual who is a
resident of a skilled nursing facility or of a part of a
facility that includes a skilled nursing facility (as determined
under regulations), unless the claim for such payment includes a
code (or codes) under a uniform coding system specified by the
Secretary that identifies the items or services furnished.''.
(4) Facility provider number required on claims submitted by
physicians.--Section 1842 (42 U.S.C. 1395u) is amended by adding
at the end the following new section:
``(t) Each request for payment, or bill submitted, for an item or
service furnished by a physician to an individual who is a resident of a
skilled nursing facility or of a part of a facility that includes a
skilled nursing facility (as determined under regulations), for which
payment may be made under this part shall include the facility's
medicare provider number.''.
(5) Conforming amendments.--
(A) Section 1819(b)(3)(C)(i) (42 U.S.C. 1395i-
3(b)(3)(C)(i)) is amended by striking ``Such'' and
inserting ``Subject to the timeframes prescribed by the
Secretary under section 1888(e)(6), such''.
(B) Section 1832(a)(1) (42 U.S.C. 1395k(a)(1)) is
amended by striking ``(2);'' and inserting ``(2) and
section 1842(b)(6)(E);''.
(C) Section 1833(a)(2)(B) (42 U.S.C. 1395l(a)(2)(B))
is amended by inserting ``or section 1888(e)(9)'' after
``section 1886''.
(D) Section 1861(h) (42 U.S.C 1395x(h)) is amended--
[[Page 111 STAT. 422]]
(i) in the opening paragraph, by striking
``paragraphs (3) and (6)'' and inserting
``paragraphs (3), (6), and (7)'', and
(ii) in paragraph (7), after ``skilled nursing
facilities'', by inserting ``, or by others under
arrangements with them made by the facility''.
(E) Section 1861(v)(7)(D) (42 U.S.C. 1395x(v)(7)(D))
is amended by inserting ``subsections (a) through (c)
of'' before ``section 1888.''.
(F) Section 1866(a)(1)(H) (42 U.S.C.
1395cc(a)(1)(H)) is amended--
(i) by redesignating clauses (i) and (ii) as
subclauses (I) and (II) respectively,
(ii) by inserting ``(i)'' after ``(H)'', and
(iii) by adding after clause (i), as so
redesignated, the following new clause:
``(ii) in the case of skilled nursing facilities which
provide covered skilled nursing facility services--
``(I) that are furnished to an individual who is a
resident of the skilled nursing facility, and
``(II) for which the individual is entitled to have
payment made under this title,
to have items and services (other than services described in
section 1888(e)(2)(A)(ii)) furnished by the skilled nursing
facility or otherwise under arrangements (as defined in section
1861(w)(1)) made by the skilled nursing facility,''.
(G) Section 1883(a)(2)(B)(ii)(II) (42 U.S.C.
1395tt(a)(2)(B)(ii)(II)) is amended by inserting
``subsections (a) through (d) of'' before ``section
1888''.
(H) Section 1888(d)(1) (42 U.S.C. 1395yy(d)(1)) is
amended by striking ``Any skilled nursing facility'' and
inserting ``Subject to subsection (e), any skilled
nursing facility''.
<<NOTE: 42 USC 1395yy note.>> (c) Medical Review Process.--In order
to ensure that medicare beneficiaries are furnished appropriate services
in skilled nursing facilities, the Secretary of Health and Human
Services shall establish and implement a thorough medical review process
to examine the effects of the amendments made by this section on the
quality of covered skilled nursing facility services furnished to
medicare beneficiaries. In developing such a medical review process, the
Secretary shall place a particular emphasis on the quality of non-
routine covered services and physicians' services for which payment is
made under title XVIII of the Social Security Act.
<<NOTE: 42 USC 1395i-3 note.>> (d) Effective Date.--The amendments
made by this section are effective for cost reporting periods beginning
on or after July 1, 1998; except that the amendments made by subsection
(b) shall apply to items and services furnished on or after July 1,
1998.
CHAPTER 4--PROVISIONS RELATED TO HOSPICE SERVICES
SEC. 4441. PAYMENTS FOR HOSPICE SERVICES.
(a) Payment Update.--Section 1814(i)(1)(C)(ii) (42 U.S.C.
1395f(i)(1)(C)(ii)) is amended--
(1) in subclause (V), by striking ``and'' at the end;
(2) by redesignating subclause (VI) as subclause (VII); and
[[Page 111 STAT. 423]]
(3) by inserting after subclause (V) the following new
subclause:
``(VI) for each of fiscal years 1998 through 2002, the
market basket percentage increase for the fiscal year involved
minus 1.0 percentage points; and''.
(b) Collection of Data.--Section 1814(i) (42 U.S.C. 1395f(i)) is
amended by adding at the end the following new paragraph:
``(3) Hospice programs providing hospice care for which payment is
made under this subsection shall submit to the Secretary such data with
respect to the costs for providing such care for each fiscal year,
beginning with fiscal year 1999, as the Secretary determines
necessary.''.
SEC. 4442. PAYMENT FOR HOME HOSPICE CARE BASED ON LOCATION WHERE CARE IS
FURNISHED.
(a) In General.--Section 1814(i)(2) (42 U.S.C. 1395f(i)(2)) is
amended by adding at the end the following:
``(D) A hospice program shall submit claims for payment for hospice
care furnished in an individual's home under this title only on the
basis of the geographic location at which the service is furnished, as
determined by the Secretary.''.
<<NOTE: 42 USC 1395f note.>> (b) Effective Date.--The amendment made
by subsection (a) applies to cost reporting periods beginning on or
after October 1, 1997.
SEC. 4443. HOSPICE CARE BENEFITS PERIODS.
(a) Restructuring of Benefit Period.--Section 1812 (42 U.S.C. 1395d)
is amended in subsections (a)(4) and (d)(1) by striking ``, a subsequent
period of 30 days, and a subsequent extension period'' and inserting
``and an unlimited number of subsequent periods of 60 days each''.
(b) Conforming Amendments.--(1) Section 1812 (42 U.S.C. 1395d) is
amended in subsection (d)(2)(B) by striking ``90- or 30-day period or a
subsequent extension period'' and inserting ``90-day period or a
subsequent 60-day period''.
(2) Section 1814(a)(7)(A) (42 U.S.C. 1395f(a)(7)(A)) is amended--
(A) in clause (i), by inserting ``and'' at the end;
(B) in clause (ii)--
(i) by striking ``30-day'' and inserting ``60-day'';
and
(ii) by striking ``, and'' at the end and inserting
a period; and
(C) by striking clause (iii).
SEC. 4444. OTHER ITEMS AND SERVICES INCLUDED IN HOSPICE CARE.
(a) In General.--Section 1861(dd)(1) (42 U.S.C. 1395x(dd)(1)) is
amended--
(1) in subparagraph (G), by striking ``and'' at the end;
(2) in subparagraph (H), by striking the period at the end
and inserting ``, and''; and
(3) by inserting after subparagraph (H) the following:
``(I) any other item or service which is specified in the
plan and for which payment may otherwise be made under this
title.''.
<<NOTE: 42 USC 1395x note.>> (b) Effective Date.--The amendment made
by subsection (a) shall apply with respect to items or services
furnished on or after April 1, 1998.
[[Page 111 STAT. 424]]
SEC. 4445. CONTRACTING WITH INDEPENDENT PHYSICIANS OR PHYSICIAN GROUPS
FOR HOSPICE CARE SERVICES PERMITTED.
Section 1861(dd)(2) (42 U.S.C. 1395x(dd)(2)) is amended--
(1) in subparagraph (A)(ii)(I), by striking ``(F),''; and
(2) in subparagraph (B)(i), by inserting ``or, in the case
of a physician described in subclause (I), under contract with''
after ``employed by''.
SEC. 4446. WAIVER OF CERTAIN STAFFING REQUIREMENTS FOR HOSPICE CARE
PROGRAMS IN NONURBANIZED AREAS.
Section 1861(dd)(5) (42 U.S.C. 1395x(dd)(5)) is amended--
(1) in subparagraph (B), by inserting ``or (C)'' after
``subparagraph (A)'' each place it appears; and
(2) by adding at the end the following:
``(C) The Secretary may waive the requirements of paragraph
(2)(A)(i) and (2)(A)(ii) for an agency or organization with respect to
the services described in paragraph (1)(B) and, with respect to dietary
counseling, paragraph (1)(H), if such agency or organization--
``(i) is located in an area which is not an urbanized area
(as defined by the Bureau of Census), and
``(ii) demonstrates to the satisfaction of the Secretary
that the agency or organization has been unable, despite
diligent efforts, to recruit appropriate personnel.''.
SEC. 4447. LIMITATION ON LIABILITY OF BENEFICIARIES FOR CERTAIN HOSPICE
COVERAGE DENIALS.
Section 1879(g) (42 U.S.C. 1395pp(g)) is amended--
(1) by redesignating paragraphs (1) and (2) as subparagraphs
(A) and (B), respectively, and moving such subparagraphs 2 ems
to the right;
(2) by striking ``is,'' and inserting ``is--'';
(3) by making the remaining text of subsection (g), as
amended, that follows ``is--'' a new paragraph (1) and indenting
such paragraph 2 ems to the right;
(4) by striking the period at the end and inserting ``;
and''; and
(5) by adding at the end the following new paragraph:
``(2) with respect to the provision of hospice care to an
individual, a determination that the individual is not
terminally ill.''.
SEC. 4448. EXTENDING THE PERIOD FOR PHYSICIAN CERTIFICATION OF AN
INDIVIDUAL'S TERMINAL ILLNESS.
Section 1814(a)(7)(A)(i) (42 U.S.C. 1395f(a)(7)(A)(i)) is amended in
the matter following subclause (II) by striking ``, not later than 2
days after hospice care is initiated (or, if each certify verbally not
later than 2 days after hospice care is initiated, not later than 8 days
after such care is initiated)'' and inserting ``at the beginning of the
period''.
<<NOTE: 42 USC 1395d note.>> SEC. 4449. EFFECTIVE DATE.
Except as otherwise provided in this chapter, the amendments made by
this chapter apply to benefits provided on or after the date of the
enactment of this chapter, regardless of whether or not an individual
has made an election under section 1812(d) of the Social Security Act
(42 U.S.C. 1395d(d)) before such date.
[[Page 111 STAT. 425]]
CHAPTER 5--OTHER PAYMENT PROVISIONS
SEC. 4451. REDUCTIONS IN PAYMENTS FOR ENROLLEE BAD DEBT.
Section 1861(v)(1) (42 U.S.C. 1395x(v)(1)) is amended by adding at
the end the following new subparagraph:
``(T) In determining such reasonable costs for hospitals, no
reduction in copayments under section 1833(t)(5)(B) shall be treated as
a bad debt and the amount of bad debts otherwise treated as allowable
costs which are attributable to the deductibles and coinsurance amounts
under this title shall be reduced--
``(i) for cost reporting periods beginning during fiscal
year 1998, by 25 percent of such amount otherwise allowable,
``(ii) for cost reporting periods beginning during fiscal
year 1999, by 40 percent of such amount otherwise allowable, and
``(iii) for cost reporting periods beginning during a
subsequent fiscal year, by 45 percent of such amount otherwise
allowable.''.
SEC. 4452. PERMANENT EXTENSION OF HEMOPHILIA PASS-THROUGH PAYMENT.
Section 6011(d) of OBRA-1989 (as amended by section 13505 of OBRA-
1993) is <<NOTE: 42 USC 1395ww note.>> amended by striking ``and shall
expire September 30, 1994.'' and inserting ``and on or before September
30, 1994, and on or after October 1, 1997.''.
SEC. 4453. REDUCTION IN PART A MEDICARE PREMIUM FOR CERTAIN PUBLIC
RETIREES.
(a) In General.--Section 1818(d) (42 U.S.C. 1395i-2(d)) is amended--
(1) in paragraph (2), by striking ``paragraph (4)'' and
inserting ``paragraphs (4) and (5)''; and
(2) by adding at the end the following new paragraph:
``(5)(A) The amount of the monthly premium shall be zero in the case
of an individual who is a person described in subparagraph (B) for a
month, if--
``(i) the individual's premium under this section for the
month is not (and will not be) paid for, in whole or in part, by
a State (under title XIX or otherwise), a political subdivision
of a State, or an agency or instrumentality of one or more
States or political subdivisions thereof; and
``(ii) in each of 84 months before such month, the
individual was enrolled in this part under this section and the
payment of the individual's premium under this section for the
month was not paid for, in whole or in part, by a State (under
title XIX or otherwise), a political subdivision of a State, or
an agency or instrumentality of one or more States or political
subdivisions thereof.
``(B) A person described in this subparagraph for a month is a
person who establishes to the satisfaction of the Secretary that, as of
the last day of the previous month--
``(i)(I) the person was receiving cash benefits under a
qualified State or local government retirement system (as
defined in subparagraph (C)) on the basis of the person's
employment in one or more positions covered under any such
system, and (II) the person would have at least 40 quarters of
coverage under title II if remuneration for medicare qualified
government employment (as defined in paragraph (1) of section
210(p),
[[Page 111 STAT. 426]]
but determined without regard to paragraph (3) of such section)
paid to such person were treated as wages paid to such person
and credited for purposes of determining quarters of coverage
under section 213;
``(ii)(I) the person was married (and had been married for
the previous 1-year period) to an individual who is described in
clause (i), or (II) the person met the requirement of clause
(i)(II) and was married (and had been married for the previous
1-year period) to an individual described in clause (i)(I);
``(iii) the person had been married to an individual for a
period of at least 1 year (at the time of such individual's
death) if (I) the individual was described in clause (i) at the
time of the individual's death, or (II) the person met the
requirement of clause (i)(II) and the individual was described
in clause (i)(I) at the time of the individual's death; or
``(iv) the person is divorced from an individual and had
been married to the individual for a period of at least 10 years
(at the time of the divorce) if (I) the individual was described
in clause (i) at the time of the divorce, or (II) the person met
the requirement of clause (i)(II) and the individual was
described in clause (i)(I) at the time of the divorce.
``(C) For purposes of subparagraph (B)(i)(I), the term `qualified
State or local government retirement system' means a retirement system
that--
``(i) is established or maintained by a State or political
subdivision thereof, or an agency or instrumentality of one or
more States or political subdivisions thereof;
``(ii) covers positions of some or all employees of such a
State, subdivision, agency, or instrumentality; and
``(iii) does not adjust cash retirement benefits based on
eligibility for a reduction in premium under this paragraph.''.
<<NOTE: 42 USC 1395i-2 note.>> (b) Effective Date.--The amendments
made by subsection (a) shall apply to premiums for months beginning with
January 1998, and months before such month may be taken into account for
purposes of meeting the requirement of section 1818(d)(5)(B)(iii) of the
Social Security Act, as added by subsection (a).
SEC. 4454. COVERAGE OF SERVICES IN RELIGIOUS NONMEDICAL HEALTH CARE
INSTITUTIONS UNDER THE MEDICARE AND MEDICAID PROGRAMS.
(a) Medicare Coverage.--
(1) In general.--Section 1861 (42 U.S.C. 1395x) (as amended
by sections 4103 and 4106) is amended--
(A) in the sixth sentence of subsection (e)--
(i) by striking ``includes'' and all that
follows up to ``but only'' and inserting
``includes a religious nonmedical health care
institution (as defined in subsection (ss)(1)),'',
and
(ii) by inserting ``consistent with section
1821'' before the period;
(B) in subsection (y)--
(i) by amending the heading to read as
follows:
``Extended Care in Religious Nonmedical Health Care Institutions'',
(ii) in paragraph (1), by striking
``includes'' and all that follows up to ``but
only'' and inserting ``includes
[[Page 111 STAT. 427]]
a religious nonmedical health care institution (as
defined in subsection (ss)(1)),'', and
(iii) by inserting ``consistent with section
1821'' before the period; and
(C) by adding at the end the following:
``Religious Nonmedical Health Care Institution
``(ss)(1) The term `religious nonmedical health care institution'
means an institution that--
``(A) is described in subsection (c)(3) of section
501 of the Internal Revenue Code of 1986 and is exempt
from taxes under subsection (a) of such section;
``(B) is lawfully operated under all applicable
Federal, State, and local laws and regulations;
``(C) provides only nonmedical nursing items and
services exclusively to patients who choose to rely
solely upon a religious method of healing and for whom
the acceptance of medical health services would be
inconsistent with their religious beliefs;
``(D) provides such nonmedical items and services
exclusively through nonmedical nursing personnel who are
experienced in caring for the physical needs of such
patients;
``(E) provides such nonmedical items and services to
inpatients on a 24-hour basis;
``(F) on the basis of its religious beliefs, does
not provide through its personnel or otherwise medical
items and services (including any medical screening,
examination, diagnosis, prognosis, treatment, or the
administration of drugs) for its patients;
``(G)(i) is not owed by, under common ownership
with, or has an ownership interest in, a provider of
medical treatment of services;
``(ii) is not affiliated with--
``(I) a provider of medical treatment or
services, or
``(II) an individual who has an ownership
interest in a provider of medical treatment or
services;
``(H) has in effect a utilization review plan
which--
``(i) provides for the review of admissions to
the institution, of the duration of stays therein,
of cases of continuous extended duration, and of
the items and services furnished by the
institution,
``(ii) requires that such reviews be made by
an appropriate committee of the institution that
includes the individuals responsible for overall
administration and for supervision of nursing
personnel at the institution,
``(iii) provides that records be maintained of
the meetings, decisions, and actions of such
committee, and
``(iv) meets such other requirements as the
Secretary finds necessary to establish an
effective utilization review plan;
``(I) provides the Secretary with such information
as the Secretary may require to implement section 1821,
[[Page 111 STAT. 428]]
including information relating to quality of care and
coverage determinations; and
``(J) meets such other requirements as the Secretary
finds necessary in the interest of the health and safety
of individuals who are furnished services in the
institution.
``(2) To the extent that the Secretary finds that the accreditation
of an institution by a State, regional, or national agency or
association provides reasonable assurances that any or all of the
requirements of paragraph (1) are met or exceeded, the Secretary may
treat such institution as meeting the condition or conditions with
respect to which the Secretary made such finding.
``(3)(A)(i) In administering this subsection and section 1821, the
Secretary shall not require any patient of a religious nonmedical health
care institution to undergo medical screening, examination, diagnosis,
prognosis, or treatment or to accept any other medical health care
service, if such patient (or legal representative of the patient)
objects thereto on religious grounds.
``(ii) Clause (i) shall not be construed as preventing the Secretary
from requiring under section 1821(a)(2) the provision of sufficient
information regarding an individual's condition as a condition for
receipt of benefits under part A for services provided in such an
institution.
``(B)(i) In administering this subsection and section 1821, the
Secretary shall not subject a religious nonmedical health care
institution or its personnel to any medical supervision, regulation, or
control, insofar as such supervision, regulation, or control would be
contrary to the religious beliefs observed by the institution or such
personnel.
``(ii) Clause (i) shall not be construed as preventing the Secretary
from reviewing items and services billed by the institution to the
extent the Secretary determines such review to be necessary to determine
whether such items and services were not covered under part A, are
excessive, or are fraudulent.
``(4)(A) For purposes of paragraph (1)(G)(i), an ownership interest
of less than 5 percent shall not be taken into account.
``(B) For purposes of paragraph (1)(G)(ii), none of the following
shall be considered to create an affiliation:
``(i) An individual serving as an uncompensated director,
trustee, officer, or other member of the governing body of a
religious nonmedical health care institution.
``(ii) An individual who is a director, trustee, officer,
employee, or staff member of a religious nonmedical health care
institution having a family relationship with an individual who
is affiliated with (or has an ownership interest in) a provider
of medical treatment or services.
``(iii) An individual or entity furnishing goods or services
as a vendor to both providers of medical treatment or services
and religious nonmedical health care institutions.''.
(2) Conditions of coverage.--Part A of title XVIII is
amended by adding at the end the following new section:
<<NOTE: 42 usc 1395i-5.>> ``conditions for coverage of religious
nonmedical health care institutional services
``Sec. 1821. (a) In General.--Subject to subsections (c) and (d),
payment under this part may be made for inpatient hospital services or
post-hospital extended care services furnished an individual in a
religious nonmedical health care institution only if--
[[Page 111 STAT. 429]]
``(1) the individual has an election in effect for such
benefits under subsection (b); and
``(2) the individual has a condition such that the
individual would qualify for benefits under this part for
inpatient hospital services or extended care services,
respectively, if the individual were an inpatient or resident in
a hospital or skilled nursing facility that was not such an
institution.
``(b) Election.--
``(1) In general.--An individual may make an election under
this subsection in a form and manner specified by the Secretary
consistent with this subsection. Unless otherwise provided, such
an election shall take effect immediately upon its execution.
Such an election, once made, shall continue in effect until
revoked.
``(2) Form.--The election form under this subsection shall
include the following:
``(A) A written statement, signed by the individual
(or such individual's legal representative), that--
``(i) the individual is conscientiously
opposed to acceptance of nonexcepted medical
treatment; and
``(ii) the individual's acceptance of
nonexcepted medical treatment would be
inconsistent with the individual's sincere
religious beliefs.
``(B) A statement that the receipt of nonexcepted
medical services shall constitute a revocation of the
election and may limit further receipt of services
described in subsection (a).
``(3) Revocation.--An election under this subsection by an
individual may be revoked by voluntarily notifying the Secretary
in writing of such revocation and shall be deemed to be revoked
if the individual receives nonexcepted medical treatment for
which reimbursement is made under this title.
``(4) Limitation on subsequent elections.--Once an
individual's election under this subsection has been made and
revoked twice--
``(A) the next election may not become effective
until the date that is 1 year after the date of most
recent previous revocation, and
``(B) any succeeding election may not become
effective until the date that is 5 years after the date
of the most recent previous revocation.
``(5) Excepted medical treatment.--For purposes of this
subsection:
``(A) Excepted medical treatment.--The term
`excepted medical treatment' means medical care or
treatment (including medical and other health
services)--
``(i) received involuntarily, or
``(ii) required under Federal or State law or
law of a political subdivision of a State.
``(B) Nonexcepted medical treatment.--The term
`nonexcepted medical treatment' means medical care or
treatment (including medical and other health services)
other than excepted medical treatment.
``(c) Monitoring and Safeguard Against Excessive Expenditures.--
``(1) Estimate of expenditures.--Before the beginning of
each fiscal year (beginning with fiscal year 2000), the
Secretary
[[Page 111 STAT. 430]]
shall estimate the level of expenditures under this part for
services described in subsection (a) for that fiscal year.
``(2) Adjustment in payments.--
``(A) Proportional adjustment.--If the Secretary
determines that the level estimated under paragraph (1)
for a fiscal year will exceed the trigger level (as
defined in subparagraph (C)) for that fiscal year, the
Secretary shall, subject to subparagraph (B), provide
for such a proportional reduction in payment amounts
under this part for services described in subsection (a)
for the fiscal year involved as will assure that such
level (taking into account any adjustment under
subparagraph (B)) does not exceed the trigger level for
that fiscal year.
``(B) Alternative adjustments.--The Secretary may,
instead of making some or all of the reduction described
in subparagraph (A), impose such other conditions or
limitations with respect to the coverage of covered
services (including limitations on new elections of
coverage and new facilities) as may be appropriate to
reduce the level of expenditures described in paragraph
(1) to the trigger level.
``(C) Trigger level.--For purposes of this
subsection--
``(i) In general.--Subject to adjustment under
paragraph (3)(B), the `trigger level' for a year
is the unadjusted trigger level described in
clause (ii).
``(ii) Unadjusted trigger level.--The
`unadjusted trigger level' for--
``(I) fiscal year 1998, is
$20,000,000, or
``(II) a succeeding fiscal year is
the amount specified under this clause
for the previous fiscal year increased
by the percentage increase in the
consumer price index for all urban
consumers (all items; United States city
average) for the 12-month period ending
with July preceding the beginning of the
fiscal year.
``(D) Prohibition of administrative and judicial
review.--There shall be no administrative or judicial
review under section 1869, 1878, or otherwise of the
estimation of expenditures under subparagraph (A) or the
application of reduction amounts under subparagraph (B).
``(E) Effect on billing.--Notwithstanding any other
provision of this title, in the case of a reduction in
payment provided under this subsection for services of a
religious nonmedical health care institution provided to
an individual, the amount that the institution is
otherwise permitted to charge the individual for such
services is increased by the amount of such reduction.
``(3) Monitoring expenditure level.--
``(A) In general.--The Secretary shall monitor the
expenditure level described in paragraph (2)(A) for each
fiscal year (beginning with fiscal year 1999).
``(B) Adjustment in trigger level.--
``(i) In general.--If the Secretary determines
that such level for a fiscal year exceeded, or was
less than, the trigger level for that fiscal year,
then, subject to clause (ii), the trigger level
for the succeeding fiscal
[[Page 111 STAT. 431]]
year shall be reduced, or increased, respectively,
by the amount of such excess or deficit.
``(ii) Limitation on carryforward.--In no case
may the increase effected under clause (i) for a
fiscal year exceed $50,000,000.
``(d) Sunset.--If the Secretary determines that the level of
expenditures described in subsection (c)(1) for 3 consecutive fiscal
years (with the first such year being not earlier than fiscal year 2002)
exceeds the trigger level for such expenditures for such years (as
determined under subsection (c)(2)), benefits shall be paid under this
part for services described in subsection (a) and furnished on or after
the first January 1 that occurs after such 3 consecutive years only with
respect to an individual who has an election in effect under subsection
(b) as of such January 1 and only during the duration of such election.
``(e) Annual Report.--At the beginning of each fiscal year
(beginning with fiscal year 1999), the Secretary shall submit to the
Committee on Ways and Means of the House of Representatives and the
Committee on Finance of the Senate an annual report on coverage and
expenditures for services described in subsection (a) under this part
and under State plans under title XIX. Such report shall include--
``(1) level of expenditures described in subsection (c)(1)
for the previous fiscal year and estimated for the fiscal year
involved;
``(2) trends in such level; and
``(3) facts and circumstances of any significant change in
such level from the level in previous fiscal years.''.
(b) Medicaid.--
(1) The third sentence of section 1902(a) (42 U.S.C.
1396a(a)) is amended by striking all that follows ``shall not
apply'' and inserting ``to a religious nonmedical health care
institution (as defined in section 1861(ss)(1)).''.
(2) Section 1908(e)(1) (42 U.S.C. 1396g-1(e)(1)) is amended
by striking all that follows ``does not include'' and inserting
``a religious nonmedical health care institution (as defined in
section 1861(ss)(1)).''.
(c) Conforming Amendments.--
(1) Section 1122(h) (42 U.S.C. 1320a-1(h)) is amended by
striking all that follows ``shall not apply to'' and inserting
``a religious nonmedical health care institution (as defined in
section 1861(ss)(1)).''.
(2) Section 1162 (42 U.S.C. 1320c-11) is amended--
(A) by amending the heading to read as follows:
``exemptions for religious nonmedical health care institutions''; and
(B) by striking all that follows ``shall not apply
with respect to a'' and inserting ``religious nonmedical
health care institution (as defined in section
1861(ss)(1)).''.
<<NOTE: 42 USC 1395i-5 note.>> (d) Effective Date.--The amendments
made by this section shall take effect on the date of the enactment of
this Act and shall apply to items and services furnished on or after
such date. By not later than July 1, 1998,
the <<NOTE: Regulations.>> Secretary of Health and Human Services shall
first issue regulations to carry out such amendments. Such regulations
may be issued so they are effective on an interim
[[Page 111 STAT. 432]]
basis pending notice and opportunity for public comment. For periods
before the effective date of such regulations, such regulations shall
recognize elections entered into in good faith in order to comply with
the requirements of section 1821(b) of the Social Security Act.
Subtitle F--Provisions Relating to Part B Only
CHAPTER 1--SERVICES OF HEALTH PROFESSIONALS
Subchapter A--Physicians' Services
SEC. 4501. ESTABLISHMENT OF SINGLE CONVERSION FACTOR FOR 1998.
(a) In General.--Section 1848(d)(1) (42 U.S.C. 1395w-4(d)(1)) is
amended--
(1) by redesignating subparagraph (C) as subparagraph (D),
and
(2) by inserting after subparagraph (B) the following:
``(C) Special rules for 1998.--The single conversion
factor for 1998 under this subsection shall be the
conversion factor for primary care services for 1997,
increased by the Secretary's estimate of the weighted
average of the three separate updates that would
otherwise occur were it not for the enactment of chapter
1 of subtitle F of title IV of the Balanced Budget Act
of 1997.''.
(b) Conforming Amendments.--Section 1848 (42 U.S.C. 1395w-4) is
amended--
(1) by striking ``(or factors)'' each place it appears in
subsection (d)(1)(A) and (d)(1)(D)(ii) (as redesignated by
subsection (a)(1)),
(2) in subsection (d)(1)(A), by striking ``or updates'',
(3) in subsection (d)(1)(D) (as redesignated by subsection
(a)(1)), by striking ``(or updates)'' each place it appears, and
(4) in subsection (j)(1), by striking ``The term'' and
inserting ``For services furnished before January 1, 1998, the
term''.
SEC. 4502. ESTABLISHING UPDATE TO CONVERSION FACTOR TO MATCH SPENDING
UNDER SUSTAINABLE GROWTH RATE.
(a) Update.--
(1) In general.--Section 1848(d)(3) (42 U.S.C. 1395w-
4(d)(3)) is amended to read as follows:
``(3) Update.--
``(A) In general.--Unless otherwise provided by law,
subject to subparagraph (D) and the budget-neutrality
factor determined by the Secretary under subsection
(c)(2)(B)(ii), the update to the single conversion
factor established in paragraph (1)(C) for a year
beginning with 1999 is equal to the product of--
``(i) 1 plus the Secretary's estimate of the
percentage increase in the MEI (as defined in
section 1842(i)(3)) for the year (divided by 100),
and
``(ii) 1 plus the Secretary's estimate of the
update adjustment factor for the year (divided by
100),
minus 1 and multiplied by 100.
[[Page 111 STAT. 433]]
``(B) Update adjustment factor.--For purposes of
subparagraph (A)(ii), the `update adjustment factor' for
a year is equal (as estimated by the Secretary) to--
``(i) the difference between (I) the sum of
the allowed expenditures for physicians' services
(as determined under subparagraph (C)) for the
period beginning April 1, 1997, and ending on
March 31 of the year involved, and (II) the amount
of actual expenditures for physicians' services
furnished during the period beginning April 1,
1997, and ending on March 31 of the preceding
year; divided by
``(ii) the actual expenditures for physicians'
services for the 12-month period ending on March
31 of the preceding year, increased by the
sustainable growth rate under subsection (f) for
the fiscal year which begins during such 12-month
period.
``(C) Determination of allowed expenditures.--For
purposes of this paragraph, the allowed expenditures for
physicians' services for the 12-month period ending with
March 31 of--
``(i) 1997 is equal to the actual expenditures
for physicians' services furnished during such 12-
month period, as estimated by the Secretary; or
``(ii) a subsequent year is equal to the
allowed expenditures for physicians' services for
the previous year, increased by the sustainable
growth rate under subsection (f) for the fiscal
year which begins during such 12-month period.
``(D) Restriction on variation from medicare
economic index.--Notwithstanding the amount of the
update adjustment factor determined under subparagraph
(B) for a year, the update in the conversion factor
under this paragraph for the year may not be--
``(i) greater than 100 times the following
amount: (1.03 + (MEI percentage/100)) -1; or
``(ii) less than 100 times the following
amount: (0.93 + (MEI percentage/100)) -1,
where `MEI percentage' means the Secretary's estimate of
the percentage increase in the MEI (as defined in
section 1842(i)(3)) for the year involved.''.
<<NOTE: 42 USC 1395w-4 note.>> (2) Effective date.--The
amendment made by this subsection shall apply to the update for
years beginning with 1999.
(b) Elimination of Report.--Section 1848(d) (42 U.S.C. 1395w-4(d))
is amended by striking paragraph (2).
SEC. 4503. REPLACEMENT OF VOLUME PERFORMANCE STANDARD WITH SUSTAINABLE
GROWTH RATE.
(a) In General.--Section 1848(f) (42 U.S.C. 1395w-4(f)) is amended
by striking paragraphs (2) through (5) and inserting the following:
``(2) Specification of growth rate.--The sustainable growth
rate for all physicians' services for a fiscal year (beginning
with fiscal year 1998) shall be equal to the product of--
``(A) 1 plus the Secretary's estimate of the
weighted average percentage increase (divided by 100) in
the fees for all physicians' services in the fiscal year
involved,
[[Page 111 STAT. 434]]
``(B) 1 plus the Secretary's estimate of the
percentage change (divided by 100) in the average number
of individuals enrolled under this part (other than
Medicare+Choice plan enrollees) from the previous fiscal
year to the fiscal year involved,
``(C) 1 plus the Secretary's estimate of the
projected percentage growth in real gross domestic
product per capita (divided by 100) from the previous
fiscal year to the fiscal year involved, and
``(D) 1 plus the Secretary's estimate of the
percentage change (divided by 100) in expenditures for
all physicians' services in the fiscal year (compared
with the previous fiscal year) which will result from
changes in law and regulations, determined without
taking into account estimated changes in expenditures
resulting from the update adjustment factor determined
under subsection (d)(3)(B),
minus 1 and multiplied by 100.
``(3) Definitions.--In this subsection:
``(A) Services included in physicians' services.--
The term `physicians' services' includes other items and
services (such as clinical diagnostic laboratory tests
and radiology services), specified by the Secretary,
that are commonly performed or furnished by a physician
or in a physician's office, but does not include
services furnished to a Medicare+Choice plan enrollee.
``(B) Medicare+choice plan enrollee.--The term
`Medicare+Choice plan enrollee' means, with respect to a
fiscal year, an individual enrolled under this part who
has elected to receive benefits under this title for the
fiscal year through a Medicare+Choice plan offered under
part C, and also includes an individual who is receiving
benefits under this part through enrollment with an
eligible organization with a risk-sharing contract under
section 1876.''.
(b) Conforming Amendment.--So much of section 1848(f) (42 U.S.C.
1395w-4(f)) as precedes paragraph (2) is amended to read as follows:
``(f) Sustainable Growth Rate.--
<<NOTE: Federal Register, publication.>> ``(1)
Publication.--The Secretary shall cause to have published in the
Federal Register the sustainable growth rate for each fiscal
year beginning with fiscal year 1998. Such publication shall
occur by not later than August 1 before each fiscal year, except
that such rate for fiscal year 1998 shall be published not later
than November 1, 1997.''.
SEC. 4504. PAYMENT RULES FOR ANESTHESIA SERVICES.
(a) In General.--Section 1848(d)(1) (42 U.S.C. 1395w-4(d)(1)), as
amended by section 4501(a), is amended--
(1) in subparagraph (C), by striking ``The single'' and
inserting ``Except as provided in subparagraph (D), the
single'';
(2) by redesignating subparagraph (D) as subparagraph (E);
and
(3) by inserting after subparagraph (C) the following new
subparagraph:
``(D) Special rules for anesthesia services.--The
separate conversion factor for anesthesia services for a
year shall be equal to 46 percent of the single
conversion
[[Page 111 STAT. 435]]
factor established for other physicians' services,
except as adjusted for changes in work, practice
expense, or malpractice relative value units.''.
<<NOTE: 42 USC 1395w-4 note.>> (b) Effective Date.--The amendments
made by subsection (a) shall apply to services furnished on or after
January 1, 1998.
SEC. 4505. IMPLEMENTATION OF RESOURCE-BASED METHODOLOGIES.
(a) 1-Year Delay in Implementation.--Section 1848(c) (42 U.S.C.
1395w-4(c)) is amended--
(1) in paragraph (2)(C)(ii), in the matter before subclause
(I) and after subclause (II), by striking ``1998'' and inserting
``1999'' each place it appears; and
(2) in paragraph (3)(C)(ii), by striking ``1998'' and
inserting ``1999''.
(b) Phased-in Implementation.--
(1) In general.--Section 1848(c)(2)(C)(ii) (42 U.S.C. 1395w-
4(c)(2)(C)(ii)) is further amended--
(A) by striking the comma at the end of clause (ii)
and inserting a period and the following:
``For 1999, such number of units shall be
determined based 75 percent on such product and
based 25 percent on the relative practice expense
resources involved in furnishing the service. For
2000, such number of units shall be determined
based 50 percent on such product and based 50
percent on such relative practice expense
resources. For 2001, such number of units shall be
determined based 25 percent on such product and
based 75 percent on such relative practice expense
resources. For a subsequent year, such number of
units shall be determined based entirely on such
relative practice expense resources.''.
(2) Conforming amendment.--Section 1848(c)(3)(C)(ii) (42
U.S.C. 1395w-4(c)(3)(C)(ii)), as amended by subsection (a)(2),
is amended by striking ``1999'' and inserting ``2002''.
(c) Review by Comptroller General.--The Comptroller General of the
United States shall review and evaluate the proposed rule on resource-
based methodology for practice expenses issued by the Secretary of
Health and Human Services. The Comptroller General shall, within 6
months of the date of the enactment of this Act, report to the
Committees on Commerce and Ways and Means of the House of
Representatives and the Committee on Finance of the Senate the results
of its evaluation, including an analysis of--
(1) the adequacy of the data used in preparing the rule,
(2) categories of allowable costs,
(3) methods for allocating direct and indirect expenses,
(4) the potential impact of the rule on beneficiary access
to services, and
(5) any other matters related to the appropriateness of
resource-based methodology for practice expenses.
The Comptroller General shall consult with representatives of
physicians' organizations with respect to matters of both data and
methodology.
<<NOTE: 42 USC 1395w-4 note.>> (d) Requirements for Developing New
Resource-Based Practice Expense Relative Value Units.--
(1) Development.--For purposes of section 1848(c)(2)(C)(ii)
of the Social Security Act, the Secretary of Health and Human
[[Page 111 STAT. 436]]
Services shall develop new resource-based relative value units.
In developing such units the Secretary shall--
(A) utilize, to the maximum extent practicable,
generally accepted cost accounting principles which (i)
recognize all staff, equipment, supplies, and expenses,
not just those which can be tied to specific procedures,
and (ii) use actual data on equipment utilization and
other key assumptions;
(B) consult with organizations representing
physicians regarding methodology and data to be used;
and
(C) develop a refinement process to be used during
each of the 4 years of the transition period.
(2) Report.--The Secretary shall transmit a report by March
1, 1998, on the development of resource-based relative value
units under paragraph (1) to the Committee on Ways and Means and
the Committee on Commerce of the House of Representatives and
the Committee on Finance of the Senate. The report shall include
a presentation of data to be used in developing the value units
and an explanation of the methodology.
<<NOTE: Publication.>> (3) Notice of proposed rulemaking.--
The Secretary shall publish a notice of proposed rulemaking with
the new resource-based relative value units on or before May 1,
1998, and shall allow for a 90-day public comment period.
(4) Items included.--The new proposed rule shall consider
the following:
(A) Impact projections which compare new proposed
payment amounts on data on actual physician practice
expenses.
(B) Impact projections for hospital-based and other
specialties, geographic payment localities, and urban
versus rural localities.
(e) Adjustments to Relative Value Units for 1998.--Section
1848(c)(2) (42 U.S.C. 1395w-4(c)(2)) is amended by adding at the end the
following new subparagraph:
``(G) Adjustments in relative value units for
1998.--
``(i) In general.--The Secretary shall--
``(I) subject to clauses (iv) and
(v), reduce the practice expense
relative value units applied to any
services described in clause (ii)
furnished in 1998 to a number equal to
110 percent of the number of work
relative value units, and
``(II) increase the practice expense
relative value units for office visit
procedure codes during 1998 by a uniform
percentage which the Secretary estimates
will result in an aggregate increase in
payments for such services equal to the
aggregate decrease in payments by reason
of subclause (I).
``(ii) Services covered.--For purposes of
clause (i), the services described in this clause
are physicians' services that are not described in
clause (iii) and for which--
``(I) there are work relative value
units, and
[[Page 111 STAT. 437]]
``(II) the number of practice
expense relative value units (determined
for 1998) exceeds 110 percent of the
number of work relative value units
(determined for such year).
``(iii) Excluded services.--For purposes of
clause (ii), the services described in this clause
are services which the Secretary determines at
least 75 percent of which are provided under this
title in an office setting.
``(iv) Limitation on aggregate reallocation.--
If the application of clause (i)(I) would result
in an aggregate amount of reductions under such
clause in excess of $390,000,000, such clause
shall be applied by substituting for 110 percent
such greater percentage as the Secretary estimates
will result in the aggregate amount of such
reductions equaling $390,000,000.
``(v) No reduction for certain services.--
Practice expense relative value units for a
procedure performed in an office or in a setting
out of an office shall not be reduced under clause
(i) if the in-office or out-of-office practice
expense relative value, respectively, for the
procedure would increase under the proposed rule
on resource-based practice expenses issued by the
Secretary on June 18, 1997 (62 Federal Register
33158 et seq.).''.
(f) Application of Resource-Based Methodology to Malpractice
Relative Value Units.--
(1) In general.--Section 1848(c)(2)(C)(iii) (42 U.S.C.
1395w-4(c)(2)(C)(iii)) is amended--
(A) in paragraph (2)(C)(iii)--
(i) by inserting ``for the service for years
before 2000'' before ``equal'', and
(ii) by striking the period at the end and
inserting a comma and by adding at the end the
following flush matter:
``and for years beginning with 2000 based on the
malpractice expense resources involved in
furnishing the service.''; and
(B) in paragraph (3)(C)(iii), by striking ``The
malpractice'' and inserting ``For years before 1999, the
malpractice''.
<<NOTE: 42 USC 1395w-4 note.>> (2) Application of certain
budget neutrality provisions.--In implementing the amendment
made by paragraph (1)(A)(ii), the provisions of clauses (ii)(II)
and (iii) of section 1848(c)(2)(B) of the Social Security Act
(42 U.S.C. 1395w-4(c)(2)(B)) shall apply in the same manner as
they apply to adjustments under clause (ii)(I) of such section.
<<NOTE: 42 USC 1395ww note.>> SEC. 4506. DISSEMINATION OF INFORMATION ON
HIGH PER DISCHARGE RELATIVE VALUES FOR IN-HOSPITAL
PHYSICIANS' SERVICES.
(a) Determination and Notice Concerning Hospital-Specific Per
Discharge Relative Values.--
(1) In general.--For 1999 and 2001 the Secretary of Health
and Human Services shall determine for each hospital--
(A) the hospital-specific per discharge relative
value under subsection (b); and
[[Page 111 STAT. 438]]
(B) whether the hospital-specific relative value is
projected to be excessive (as determined based on such
value represented as a percentage of the median of
hospital-specific per discharge relative values
determined under subsection (b)).
(2) Notice to subset of medical staffs; evaluation of
responses.--The Secretary shall notify the medical executive
committee of a subset of the hospitals identified under
paragraph (1)(B) as having an excessive hospital-specific
relative value, of the determinations made with respect to the
medical staff under paragraph (1). The Secretary shall evaluate
the responses of the hospitals so notified with the responses of
other hospitals so identified that were not so notified.
(b) Determination of Hospital-Specific Per Discharge Relative
Values.--
(1) In general.--For purposes of this section, the hospital-
specific per discharge relative value for the medical staff of a
hospital (other than a teaching hospital) for a year shall be
equal to the average per discharge relative value (as determined
under section 1848(c)(2) of the Social Security Act (42 U.S.C.
1395w-4(c)(2)) for physicians' services furnished to inpatients
of the hospital by the hospital's medical staff (excluding
interns and residents) during the second year preceding that
calendar year, adjusted for variations in case-mix among
hospitals and disproportionate share status and teaching status
among hospitals (as determined by the Secretary under paragraph
(3)).
(2) Special rule for teaching hospitals.--The hospital-
specific relative value projected for a teaching hospital in a
year shall be equal to the sum of--
(A) the average per discharge relative value (as
determined under section 1848(c)(2) of such Act) for
physicians' services furnished to inpatients of the
hospital by the hospital's medical staff (excluding
interns and residents) during the second year preceding
that calendar year, and
(B) the equivalent per discharge relative value (as
determined under such section) for physicians' services
furnished to inpatients of the hospital by interns and
residents of the hospital during the second year
preceding that calendar year, adjusted for variations in
case-mix among hospitals, and in disproportionate share
status and teaching status among hospitals (as
determined by the Secretary under paragraph (3)).
The Secretary shall determine the equivalent relative value unit
per discharge for interns and residents based on the best
available data and may make such adjustment in the aggregate.
(3) Adjustment for teaching and disproportionate share
hospitals.--The Secretary shall adjust the allowable per
discharge relative values otherwise determined under this
subsection to take into account the needs of teaching hospitals
and hospitals receiving additional payments under subparagraphs
(F) and (G) of section 1886(d)(5) of the Social Security Act (42
U.S.C. 1395ww(d)(5)). The adjustment for teaching status or
disproportionate share shall not be less than zero.
(c) Definitions.--For purposes of this section:
[[Page 111 STAT. 439]]
(1) Hospital.--The term ``hospital'' means a subsection (d)
hospital as defined in section 1886(d) of the Social Security
Act (42 U.S.C. 1395ww(d)) .
(2) Medical staff.--An individual furnishing a physician's
service is considered to be on the medical staff of a hospital--
(A) if (in accordance with requirements for
hospitals established by the Joint Commission on
Accreditation of Health Organizations)--
(i) the individual is subject to bylaws,
rules, and regulations established by the hospital
to provide a framework for the self-governance of
medical staff activities,
(ii) subject to the bylaws, rules, and
regulations, the individual has clinical
privileges granted by the hospital's governing
body, and
(iii) under the clinical privileges, the
individual may provide physicians' services
independently within the scope of the individual's
clinical privileges, or
(B) if the physician provides at least one service
to an individual entitled to benefits under this title
in that hospital.
(3) Physicians' services.--The term ``physicians' services''
means the services described in section 1848(j)(3) of the Social
Security Act (42 U.S.C. 1395w-4(j)(3)).
(4) Rural area; urban area.--The terms ``rural area'' and
``urban area'' have the meaning given those terms under section
1886(d)(2)(D) of such Act (42 U.S.C. 1395ww(d)(2)(D)).
(5) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(6) Teaching hospital.--The term ``teaching hospital'' means
a hospital which has a teaching program approved as specified in
section 1861(b)(6) of the Social Security Act (42 U.S.C.
1395x(b)(6)).
SEC. 4507. USE OF PRIVATE CONTRACTS BY MEDICARE BENEFICIARIES.
(a) Items or Services Provided Through Private Contracts.--
(1) In general.--Section 1802 (42 U.S.C. 1395a) is amended
by adding at the end the following new subsection:
``(b) Use of Private Contracts by Medicare Beneficiaries.--
``(1) In general.--Subject to the provisions of this
subsection, nothing in this title shall prohibit a physician or
practitioner from entering into a private contract with a
medicare beneficiary for any item or service--
``(A) for which no claim for payment is to be
submitted under this title, and
``(B) for which the physician or practitioner
receives--
``(i) no reimbursement under this title
directly or on a capitated basis, and
``(ii) receives no amount for such item or
service from an organization which receives
reimbursement for such item or service under this
title directly or on a capitated basis.
``(2) Beneficiary protections.--
``(A) In general.--Paragraph (1) shall not apply to
any contract unless--
[[Page 111 STAT. 440]]
``(i) the contract is in writing and is signed
by the medicare beneficiary before any item or
service is provided pursuant to the contract;
``(ii) the contract contains the items
described in subparagraph (B); and
``(iii) the contract is not entered into at a
time when the medicare beneficiary is facing an
emergency or urgent health care situation.
``(B) Items required to be included in contract.--
Any contract to provide items and services to which
paragraph (1) applies shall clearly indicate to the
medicare beneficiary that by signing such contract the
beneficiary--
``(i) agrees not to submit a claim (or to
request that the physician or practitioner submit
a claim) under this title for such items or
services even if such items or services are
otherwise covered by this title;
``(ii) agrees to be responsible, whether
through insurance or otherwise, for payment of
such items or services and understands that no
reimbursement will be provided under this title
for such items or services;
``(iii) acknowledges that no limits under this
title (including the limits under section 1848(g))
apply to amounts that may be charged for such
items or services;
``(iv) acknowledges that Medigap plans under
section 1882 do not, and other supplemental
insurance plans may elect not to, make payments
for such items and services because payment is not
made under this title; and
``(v) acknowledges that the medicare
beneficiary has the right to have such items or
services provided by other physicians or
practitioners for whom payment would be made under
this title.
Such contract shall also clearly indicate whether the
physician or practitioner is excluded from participation
under the medicare program under section 1128.
``(3) Physician or practitioner requirements.--
``(A) In general.--Paragraph (1) shall not apply to
any contract entered into by a physician or practitioner
unless an affidavit described in subparagraph (B) is in
effect during the period any item or service is to be
provided pursuant to the contract.
``(B) Affidavit.--An affidavit is described in this
subparagraph if--
``(i) the affidavit identifies the physician
or practitioner and is in writing and is signed by
the physician or practitioner;
``(ii) the affidavit provides that the
physician or practitioner will not submit any
claim under this title for any item or service
provided to any medicare beneficiary (and will not
receive any reimbursement or amount described in
paragraph (1)(B) for any such item or service)
during the 2-year period beginning on the date the
affidavit is signed; and
``(iii) a copy of the affidavit is filed with
the Secretary no later than 10 days after the
first contract to which such affidavit applies is
entered into.
[[Page 111 STAT. 441]]
``(C) Enforcement.--If a physician or practitioner
signing an affidavit under subparagraph (B) knowingly
and willfully submits a claim under this title for any
item or service provided during the 2-year period
described in subparagraph (B)(ii) (or receives any
reimbursement or amount described in paragraph (1)(B)
for any such item or service) with respect to such
affidavit--
``(i) this subsection shall not apply with
respect to any items and services provided by the
physician or practitioner pursuant to any contract
on and after the date of such submission and
before the end of such period; and
``(ii) no payment shall be made under this
title for any item or service furnished by the
physician or practitioner during the period
described in clause (i) (and no reimbursement or
payment of any amount described in paragraph
(1)(B) shall be made for any such item or
service).
``(4) Limitation on actual charge and claim submission
requirement not applicable.--Section 1848(g) shall not apply
with respect to any item or service provided to a medicare
beneficiary under a contract described in paragraph (1).
``(5) Definitions.--In this subsection:
``(A) Medicare beneficiary.--The term `medicare
beneficiary' means an individual who is entitled to
benefits under part A or enrolled under part B.
``(B) Physician.--The term `physician' has the
meaning given such term by section 1861(r)(1).
``(C) Practitioner.--The term `practitioner' has the
meaning given such term by section 1842(b)(18)(C).''
(2) Conforming amendments.--
(A) Section 1802 (42 U.S.C. 1395a) is amended by
striking ``Any'' and inserting ``(a) Basic Freedom of
Choice.--Any''.
(B) Section 1862(a) (42 U.S.C. 1395y(a)), as amended
by sections 4319(b) and 4432, is amended by striking
``or'' at the end of paragraph (17), by striking the
period at the end of paragraph (18) and inserting ``;
or'', and by adding after paragraph (18) the following
new paragraph:
``(19) which are for items or services which are furnished
pursuant to a private contract described in section 1802(b).''.
<<NOTE: 42 USC 1395a note.>> (b) Report.--Not later than October 1,
2001, the Secretary of Health and Human Services shall submit a report
to Congress on the effect on the program under this title of private
contracts entered into under the amendment made by subsection (a). Such
report shall include--
(1) analyses regarding--
(A) the fiscal impact of such contracts on total
Federal expenditures under title XVIII of the Social
Security Act and on out-of-pocket expenditures by
medicare beneficiaries for health services under such
title; and
(B) the quality of the health services provided
under such contracts; and
(2) recommendations as to whether medicare beneficiaries
should continue to be able to enter private contracts under
section 1802(b) of such Act (as added by subsection (a)) and
[[Page 111 STAT. 442]]
if so, what legislative changes, if any should be made to
improve such contracts.
<<NOTE: 42 USC 1395a note.>> (c) Effective Date.--The amendment made
by subsection (a) shall apply with respect to contracts entered into on
and after January 1, 1998.
Subchapter B--Other Health Care Professionals
SEC. 4511. INCREASED MEDICARE REIMBURSEMENT FOR NURSE PRACTITIONERS AND
CLINICAL NURSE SPECIALISTS.
(a) Removal of Restrictions on Settings.--
(1) In general.--Clause (ii) of section 1861(s)(2)(K) (42
U.S.C. 1395x(s)(2)(K)) is amended to read as follows:
``(ii) services which would be physicians' services if
furnished by a physician (as defined in subsection (r)(1)) and
which are performed by a nurse practitioner or clinical nurse
specialist (as defined in subsection (aa)(5)) working in
collaboration (as defined in subsection (aa)(6)) with a
physician (as defined in subsection (r)(1)) which the nurse
practitioner or clinical nurse specialist is legally authorized
to perform by the State in which the services are performed, and
such services and supplies furnished as an incident to such
services as would be covered under subparagraph (A) if furnished
incident to a physician's professional service, but only if no
facility or other provider charges or is paid any amounts with
respect to the furnishing of such services;''.
(2) Conforming amendments.--(A) Section 1861(s)(2)(K) (42
U.S.C. 1395x(s)(2)(K)) is further amended--
(i) in clause (i), by inserting ``and such services
and supplies furnished as incident to such services as
would be covered under subparagraph (A) if furnished
incident to a physician's professional service; and''
after ``are performed,''; and
(ii) by striking clauses (iii) and (iv).
(B) Section 1861(b)(4) (42 U.S.C. 1395x(b)(4)) is amended by
striking ``clauses (i) or (iii) of subsection (s)(2)(K)'' and
inserting ``subsection (s)(2)(K)''.
(C) Section 1862(a)(14) (42 U.S.C. 1395y(a)(14)) is amended
by striking ``section 1861(s)(2)(K)(i) or 1861(s)(2)(K)(iii)''
and inserting ``section 1861(s)(2)(K)''.
(D) Section 1866(a)(1)(H) (42 U.S.C. 1395cc(a)(1)(H)) is
amended by striking ``section 1861(s)(2)(K)(i) or
1861(s)(2)(K)(iii)'' and inserting ``section 1861(s)(2)(K)''.
(E) Section 1888(e)(2)(A)(ii) (42 U.S.C.
1395yy(e)(2)(A)(ii)), as added by section 4432(a) (relating to
prospective payment system for rehabilitation hospitals), is
amended by striking ``through (iii)'' and inserting ``and
(ii)''.
(b) Increased Payment.--
(1) Fee schedule amount.--Subparagraph (O) of section
1833(a)(1) (42 U.S.C. 1395l(a)(1)) is amended to read as
follows: ``(O) with respect to services described in section
1861(s)(2)(K)(ii) (relating to nurse practitioner or clinical
nurse specialist services), the amounts paid shall be equal to
80 percent of (i) the lesser of the actual charge or 85 percent
of the fee schedule amount provided under section 1848, or (ii)
in the case of services as an assistant at surgery, the lesser
of the actual charge or 85 percent of the amount that
[[Page 111 STAT. 443]]
would otherwise be recognized if performed by a physician who is
serving as an assistant at surgery; and''.
(2) Conforming amendments.--Section 1833(r) (42 U.S.C.
1395l(r)) is amended--
(A) in paragraph (1), by striking ``section
1861(s)(2)(K)(iii) (relating to nurse practitioner or
clinical nurse specialist services provided in a rural
area)'' and inserting ``section 1861(s)(2)(K)(ii)
(relating to nurse practitioner or clinical nurse
specialist services)'';
(B) by striking paragraph (2);
(C) in paragraph (3), by striking ``section
1861(s)(2)(K)(iii)'' and inserting ``section
1861(s)(2)(K)(ii)''; and
(D) by redesignating paragraph (3) as paragraph (2).
(c) Direct Payment for Nurse Practitioners and Clinical Nurse
Specialists.--Section 1832(a)(2)(B)(iv) (42 U.S.C. 1395k(a)(2)(B)(iv))
is amended by striking ``provided in a rural area (as defined in section
1886(d)(2)(D))'' and inserting ``but only if no facility or other
provider charges or is paid any amounts with respect to the furnishing
of such services''.
(d) Definition of Clinical Nurse Specialist Clarified.--Section
1861(aa)(5) (42 U.S.C. 1395x(aa)(5)) is amended--
(1) by inserting ``(A)'' after ``(5)'';
(2) by striking ``The term `physician assistant' '' and all
that follows through ``who performs'' and inserting ``The term
`physician assistant' and the term `nurse practitioner' mean,
for purposes of this title, a physician assistant or nurse
practitioner who performs''; and
(3) by adding at the end the following new subparagraph:
``(B) The term `clinical nurse specialist' means, for purposes of
this title, an individual who--
``(i) is a registered nurse and is licensed to practice
nursing in the State in which the clinical nurse specialist
services are performed; and
``(ii) holds a master's degree in a defined clinical area of
nursing from an accredited educational institution.''.
<<NOTE: 42 USC 1395k note.>> (e) Effective Date.--The amendments
made by this section shall apply with respect to services furnished and
supplies provided on and after January 1, 1998.
SEC. 4512. INCREASED MEDICARE REIMBURSEMENT FOR PHYSICIAN ASSISTANTS.
(a) Removal of Restriction on Settings.--Section 1861(s)(2)(K)(i)
(42 U.S.C. 1395x(s)(2)(K)(i)), as amended by section 4511, is amended--
(1) by striking ``(I) in a hospital'' and all that follows
through ``shortage area,'', and
(2) by adding at the end the following: ``but only if no
facility or other provider charges or is paid any amounts with
respect to the furnishing of such services,''.
(b) Increased Payment.--
(1) Fee schedule amount.--Section 1833(a)(1)(O) (42 U.S.C.
1395l(a)(1)(O)), as amended by section 4511, is further
amended--
(A) by striking ``section 1861(s)(2)(K)(ii)'' and
inserting ``1861(s)(2)(K)'', and
[[Page 111 STAT. 444]]
(B) by striking ``nurse practitioner or clinical
nurse specialist services'' and inserting ``services
furnished by physician assistants, nurse practitioners,
or clinic nurse specialists''.
(2) Conforming amendment.--Paragraph (12) of section 1842(b)
(42 U.S.C. 1395u(b)) is repealed.
(c) Removal of Restriction on Employment Relationship.--Section
1842(b)(6) (42 U.S.C. 1395u(b)(6)), as amended by section 4205, is
amended by adding at the end the following new sentence: ``For purposes
of subparagraph (C) of the first sentence of this paragraph, an
employment relationship may include any independent contractor
arrangement, and employer status shall be determined in accordance with
the law of the State in which the services described in such clause are
performed.''.
<<NOTE: 42 USC 1395l note.>> (d) Effective Date.--The amendments
made by this section shall apply with respect to services furnished and
supplies provided on and after January 1, 1998.
SEC. 4513. NO X-RAY REQUIRED FOR CHIROPRACTIC SERVICES.
(a) In General.--Section 1861(r)(5) (42 U.S.C. 1395x(r)(5)) is
amended by striking ``demonstrated by X-ray to exist''.
<<NOTE: 42 USC 1395x note.>> (b) Effective Date.--The amendment made
by subsection (a) applies to services furnished on or after January 1,
2000.
<<NOTE: 42 USC 1395x note.>> (c) Utilization Guidelines.--The
Secretary of Health and Human Services shall develop and implement
utilization guidelines relating to the coverage of chiropractic services
under part B of title XVIII of the Social Security Act in cases in which
a subluxation has not been demonstrated by X-ray to exist.
CHAPTER 2--PAYMENT FOR HOSPITAL OUTPATIENT DEPARTMENT SERVICES
SEC. 4521. ELIMINATION OF FORMULA-DRIVEN OVERPAYMENTS (FDO) FOR CERTAIN
OUTPATIENT HOSPITAL SERVICES.
(a) Elimination of FDO for Ambulatory Surgical Center Procedures.--
Section 1833(i)(3)(B)(i)(II) (42 U.S.C. 1395l(i)(3)(B)(i)(II)) is
amended--
(1) by striking ``of 80 percent''; and
(2) by striking the period at the end and inserting the
following: ``, less the amount a provider may charge as
described in clause (ii) of section 1866(a)(2)(A).''.
(b) Elimination of FDO for Radiology Services and Diagnostic
Procedures.--Section 1833(n)(1)(B)(i) (42 U.S.C. 1395l(n)(1)(B)(i)) is
amended--
(1) by striking ``of 80 percent'', and
(2) by inserting before the period at the end the following:
``, less the amount a provider may charge as described in clause
(ii) of section 1866(a)(2)(A)''.
<<NOTE: 42 USC 1395l note.>> (c) Effective Date.--The amendments
made by this section shall apply to services furnished during portions
of cost reporting periods occurring on or after October 1, 1997.
SEC. 4522. EXTENSION OF REDUCTIONS IN PAYMENTS FOR COSTS OF HOSPITAL
OUTPATIENT SERVICES.
(a) Reduction in Payments for Capital-Related Costs.--Section
1861(v)(1)(S)(ii)(I) (42 U.S.C. 1395x(v)(1)(S)(ii)(I)) is amended by
striking ``through 1998'' and inserting ``through 1999 and during fiscal
year 2000 before January 1, 2000''.
[[Page 111 STAT. 445]]
(b) Reduction in Payments for Other Costs.--Section
1861(v)(1)(S)(ii)(II) (42 U.S.C. 1395x(v)(1)(S)(ii)(II)) is amended by
striking ``through 1998'' and inserting ``through 1999 and during fiscal
year 2000 before January 1, 2000''.
SEC. 4523. PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT DEPARTMENT
SERVICES.
(a) In General.--Section 1833 (42 U.S.C. 1395l) is amended by adding
at the end the following:
``(t) Prospective Payment System for Hospital Outpatient Department
Services.--
``(1) Amount of payment.--
``(A) In general.--With respect to covered OPD
services (as defined in subparagraph (B)) furnished
during a year beginning with 1999, the amount of payment
under this part shall be determined under a prospective
payment system established by the Secretary in
accordance with this subsection.
``(B) Definition of covered opd services.--For
purposes of this subsection, the term `covered OPD
services'--
``(i) means hospital outpatient services
designated by the Secretary;
``(ii) subject to clause (iii), includes
inpatient hospital services designated by the
Secretary that are covered under this part and
furnished to a hospital inpatient who (I) is
entitled to benefits under part A but has
exhausted benefits for inpatient hospital services
during a spell of illness, or (II) is not so
entitled; but
``(iii) does not include any therapy services
described in subsection (a)(8) or ambulance
services, for which payment is made under a fee
schedule described in section 1834(k) or section
1834(l).
``(2) System requirements.--Under the payment system--
``(A) the Secretary shall develop a classification
system for covered OPD services;
``(B) the Secretary may establish groups of covered
OPD services, within the classification system described
in subparagraph (A), so that services classified within
each group are comparable clinically and with respect to
the use of resources;
``(C) the Secretary shall, using data on claims from
1996 and using data from the most recent available cost
reports, establish relative payment weights for covered
OPD services (and any groups of such services described
in subparagraph (B)) based on median hospital costs and
shall determine projections of the frequency of
utilization of each such service (or group of services)
in 1999;
``(D) the Secretary shall determine a wage
adjustment factor to adjust the portion of payment and
coinsurance attributable to labor-related costs for
relative differences in labor and labor-related costs
across geographic regions in a budget neutral manner;
``(E) the Secretary shall establish other
adjustments, in a budget neutral manner, as determined
to be necessary to ensure equitable payments, such as
outlier adjustments or adjustments for certain classes
of hospitals; and
[[Page 111 STAT. 446]]
``(F) the Secretary shall develop a method for
controlling unnecessary increases in the volume of
covered OPD services.
``(3) Calculation of base amounts.--
``(A) Aggregate amounts that would be payable if
deductibles were disregarded.--The Secretary shall
estimate the sum of--
``(i) the total amounts that would be payable
from the Trust Fund under this part for covered
OPD services in 1999, determined without regard to
this subsection, as though the deductible under
section 1833(b) did not apply, and
``(ii) the total amounts of copayments
estimated to be paid under this subsection by
beneficiaries to hospitals for covered OPD
services in 1999, as though the deductible under
section 1833(b) did not apply.
``(B) Unadjusted copayment amount.--
``(i) In general.--For purposes of this
subsection, subject to clause (ii), the
`unadjusted copayment amount' applicable to a
covered OPD service (or group of such services) is
20 percent of the national median of the charges
for the service (or services within the group)
furnished during 1996, updated to 1999 using the
Secretary's estimate of charge growth during the
period.
``(ii) Adjusted to be 20 percent when fully
phased in.--If the pre-deductible payment
percentage for a covered OPD service (or group of
such services) furnished in a year would be equal
to or exceed 80 percent, then the unadjusted
copayment amount shall be 20 percent of amount
determined under subparagraph (D).
``(iii) Rules for new services.--The Secretary
shall establish rules for establishment of an
unadjusted copayment amount for a covered OPD
service not furnished during 1996, based upon its
classification within a group of such services.
``(C) Calculation of conversion factors.--
``(i) For 1999.--
``(I) In general.--The Secretary
shall establish a 1999 conversion factor
for determining the medicare OPD fee
schedule amounts for each covered OPD
service (or group of such services)
furnished in 1999. Such conversion
factor shall be established on the basis
of the weights and frequencies described
in paragraph (2)(C) and in such a manner
that the sum for all services and groups
of the products (described in subclause
(II) for each such service or group)
equals the total projected amount
described in subparagraph (A).
``(II) Product described.--The
Secretary shall determine for each
service or group the product of the
medicare OPD fee schedule amounts
(taking into account appropriate
adjustments described in paragraphs
(2)(D) and (2)(E)) and the estimated
frequencies for such service or group.
[[Page 111 STAT. 447]]
``(ii) Subsequent years.--Subject to paragraph
(8)(B), the Secretary shall establish a conversion
factor for covered OPD services furnished in
subsequent years in an amount equal to the
conversion factor established under this
subparagraph and applicable to such services
furnished in the previous year increased by the
OPD fee schedule increase factor specified under
clause (iii) for the year involved.
``(iii) OPD fee schedule increase factor.--For
purposes of this subparagraph, the `OPD fee
schedule increase factor' for services furnished
in a year is equal to the market basket percentage
increase applicable under section
1886(b)(3)(B)(iii) to hospital discharges
occurring during the fiscal year ending in such
year, reduced by 1 percentage point for such
factor for services furnished in each of 2000,
2001, and 2002. In applying the previous sentence
for years beginning with 2000, the Secretary may
substitute for the market basket percentage
increase an annual percentage increase that is
computed and applied with respect to covered OPD
services furnished in a year in the same manner as
the market basket percentage increase is
determined and applied to inpatient hospital
services for discharges occurring in a fiscal
year.
``(D) Calculation of medicare opd fee schedule
amounts.--The Secretary shall compute a medicare OPD fee
schedule amount for each covered OPD service (or group
of such services) furnished in a year, in an amount
equal to the product of--
``(i) the conversion factor computed under
subparagraph (C) for the year, and
``(ii) the relative payment weight (determined
under paragraph (2)(C)) for the service or group.
``(E) Pre-deductible payment percentage.--The pre-
deductible payment percentage for a covered OPD service
(or group of such services) furnished in a year is equal
to the ratio of--
``(i) the medicare OPD fee schedule amount
established under subparagraph (D) for the year,
minus the unadjusted copayment amount determined
under subparagraph (B) for the service or group,
to
``(ii) the medicare OPD fee schedule amount
determined under subparagraph (D) for the year for
such service or group.
``(4) Medicare payment amount.--The amount of payment made
from the Trust Fund under this part for a covered OPD service
(and such services classified within a group) furnished in a
year is determined as follows:
``(A) Fee schedule adjustments.--The medicare OPD
fee schedule amount (computed under paragraph (3)(D))
for the service or group and year is adjusted for
relative differences in the cost of labor and other
factors determined by the Secretary, as computed under
paragraphs (2)(D) and (2)(E).
``(B) Subtract applicable deductible.--Reduce the
adjusted amount determined under subparagraph (A) by
[[Page 111 STAT. 448]]
the amount of the deductible under section 1833(b), to
the extent applicable.
``(C) Apply payment proportion to remainder.--The
amount of payment is the amount so determined under
subparagraph (B) multiplied by the pre-deductible
payment percentage (as determined under paragraph
(3)(E)) for the service or group and year involved.
``(5) Copayment amount.--
``(A) In general.--Except as provided in
subparagraph (B), the copayment amount under this
subsection is the amount by which the amount described
in paragraph (4)(B) exceeds the amount of payment
determined under paragraph (4)(C).
``(B) Election to offer reduced copayment amount.--
The <<NOTE: Procedures.>> Secretary shall establish a
procedure under which a hospital, before the beginning
of a year (beginning with 1999), may elect to reduce the
copayment amount otherwise established under
subparagraph (A) for some or all covered OPD services to
an amount that is not less than 20 percent of the
medicare OPD fee schedule amount (computed under
paragraph (3)(D)) for the service involved. Under such
procedures, such reduced copayment amount may not be
further reduced or increased during the year involved
and the hospital may disseminate information on the
reduction of copayment amount effected under this
subparagraph.
``(C) No impact on deductibles.--Nothing in this
paragraph shall be construed as affecting a hospital's
authority to waive the charging of a deductible under
section 1833(b).
``(6) Periodic review and adjustments components of
prospective payment system.--
``(A) Periodic review.--The Secretary may
periodically review and revise the groups, the relative
payment weights, and the wage and other adjustments
described in paragraph (2) to take into account changes
in medical practice, changes in technology, the addition
of new services, new cost data, and other relevant
information and factors.
``(B) Budget neutrality adjustment.--If the
Secretary makes adjustments under subparagraph (A), then
the adjustments for a year may not cause the estimated
amount of expenditures under this part for the year to
increase or decrease from the estimated amount of
expenditures under this part that would have been made
if the adjustments had not been made.
``(C) Update factor.--If the Secretary determines
under methodologies described in paragraph (2)(F) that
the volume of services paid for under this subsection
increased beyond amounts established through those
methodologies, the Secretary may appropriately adjust
the update to the conversion factor otherwise applicable
in a subsequent year.
``(7) Special rule for ambulance services.--The Secretary
shall pay for hospital outpatient services that are ambulance
services on the basis described in the matter in subsection
(a)(1) preceding subparagraph (A), or, if applicable, the fee
schedule established under section 1834(l).
[[Page 111 STAT. 449]]
``(8) Special rules for certain hospitals.--In the case of
hospitals described in section 1886(d)(1)(B)(v)--
``(A) the system under this subsection shall not
apply to covered OPD services furnished before January
1, 2000; and
``(B) the Secretary may establish a separate
conversion factor for such services in a manner that
specifically takes into account the unique costs
incurred by such hospitals by virtue of their patient
population and service intensity.
``(9) Limitation on review.--There shall be no
administrative or judicial review under section 1869, 1878, or
otherwise of--
``(A) the development of the classification system
under paragraph (2), including the establishment of
groups and relative payment weights for covered OPD
services, of wage adjustment factors, other adjustments,
and methods described in paragraph (2)(F);
``(B) the calculation of base amounts under
paragraph (3);
``(C) periodic adjustments made under paragraph (6);
and
``(D) the establishment of a separate conversion
factor under paragraph (8)(B).''.
(b) Coinsurance.--Section 1866(a)(2)(A)(ii) (42 U.S.C.
1395cc(a)(2)(A)(ii)) is amended by adding at the end the following: ``In
the case of items and services for which payment is made under part B
under the prospective payment system established under section 1833(t),
clause (ii) of the first sentence shall be applied by substituting for
20 percent of the reasonable charge, the applicable copayment amount
established under section 1833(t)(5).''.
(c) Treatment of Reduction in Copayment Amount.--Section 1128A(i)(6)
(42 U.S.C. 1320a-7a(i)(6)) is amended--
(1) by striking ``or'' at the end of subparagraph (B),
(2) by striking the period at the end of subparagraph (C)
and inserting ``; or'', and
(3) by adding at the end the following new subparagraph:
``(D) a reduction in the copayment amount for
covered OPD services under section 1833(t)(5)(B).''.
(d) Conforming Amendments.--
(1) Approved asc procedures performed in hospital outpatient
departments.--
(A)(i) Section 1833(i)(3)(A) (42 U.S.C.
1395l(i)(3)(A)) is amended--
(I) by inserting ``before January 1, 1999,''
after ``furnished'', and
(II) by striking ``in a cost reporting
period''.
<<NOTE: Applicability. 42 USC 1395l note.>> (ii) The
amendment made by clause (i) shall apply to services
furnished on or after January 1, 1999.
(B) Section 1833(a)(4) (42 U.S.C. 1395l(a)(4)) is
amended by inserting ``or subsection (t)'' before the
semicolon.
(2) Radiology and other diagnostic procedures.--
(A) Section 1833(n)(1)(A) (42 U.S.C. 1395l(n)(1)(A))
is amended by inserting ``and before January 1, 1999,''
after ``October 1, 1988,'' and after ``October 1,
1989,''.
[[Page 111 STAT. 450]]
(B) Section 1833(a)(2)(E) (42 U.S.C. 1395l(a)(2)(E))
is amended by inserting ``or, for services or procedures
performed on or after January 1, 1999, subsection (t)''
before the semicolon.
(3) Other hospital outpatient services.--Section
1833(a)(2)(B) (42 U.S.C. 1395l(a)(2)(B)) is amended--
(A) in clause (i), by inserting ``furnished before
January 1, 1999,'' after ``(i)'',
(B) in clause (ii), by inserting ``before January 1,
1999,'' after ``furnished'',
(C) by redesignating clause (iii) as clause (iv),
and
(D) by inserting after clause (ii), the following
new clause:
``(iii) if such services are furnished on or
after January 1, 1999, the amount determined under
subsection (t), or''.
CHAPTER 3--AMBULANCE SERVICES
SEC. 4531. PAYMENTS FOR AMBULANCE SERVICES.
(a) Interim Reductions.--
(1) Payments determined on reasonable cost basis.--Section
1861(v)(1) (42 U.S.C. 1395x(v)(1)), as amended by section 4451,
is amended by adding at the end the following new subparagraph:
``(U) In determining the reasonable cost of
ambulance services (as described in subsection (s)(7))
provided during fiscal year 1998, during fiscal year
1999, and during so much of fiscal year 2000 as precedes
January 1, 2000, the Secretary shall not recognize the
costs per trip in excess of costs recognized as
reasonable for ambulance services provided on a per trip
basis during the previous fiscal year (after application
of this subparagraph), increased by the percentage
increase in the consumer price index for all urban
consumers (U.S. city average) as estimated by the
Secretary for the 12-month period ending with the
midpoint of the fiscal year involved reduced by 1.0
percentage point. For ambulance services provided after
June 30, 1998, the Secretary may provide that claims for
such services must include a code (or codes) under a
uniform coding system specified by the Secretary that
identifies the services furnished.''.
(2) Payments determined on reasonable charge basis.--Section
1842(b) (42 U.S.C. 1395u(b)) is amended by adding at the end the
following new paragraph:
``(19) For purposes of section 1833(a)(1), the reasonable charge for
ambulance services (as described in section 1861(s)(7)) provided during
calendar year 1998 and calendar year 1999 may not exceed the reasonable
charge for such services provided during the previous calendar year
(after application of this paragraph), increased by the percentage
increase in the consumer price index for all urban consumers (U.S. city
average) as estimated by the Secretary for the 12-month period ending
with the midpoint of the year involved reduced by 1.0 percentage
point.''.
(b) Establishment of Prospective Fee Schedule.--
[[Page 111 STAT. 451]]
(1) Payment in accordance with fee schedule.--Section
1833(a)(1) (42 U.S.C. 1395l(a)(1)), as amended by section
4315(b), is amended--
(A) by striking ``and (Q)'' and inserting ``(Q)'';
and
(B) by striking the semicolon at the end and
inserting the following: ``, and (R) with respect to
ambulance service, the amounts paid shall be 80 percent
of the lesser of the actual charge for the services or
the amount determined by a fee schedule established by
the Secretary under section 1834(l);''.
(2) Establishment of schedule.--Section 1834 (42 U.S.C.
1395m), as amended by section 4541, is amended by adding at the
end the following new subsection:
``(l) Establishment of Fee Schedule for Ambulance Services.--
``(1) In general.--The Secretary shall establish a fee
schedule for payment for ambulance services whether provided
directly by a supplier or provider or under arrangement with a
provider under this part through a negotiated rulemaking process
described in title 5, United States Code, and in accordance with
the requirements of this subsection.
``(2) Considerations.--In establishing such fee schedule,
the Secretary shall--
``(A) establish mechanisms to control increases in
expenditures for ambulance services under this part;
``(B) establish definitions for ambulance services
which link payments to the type of services provided;
``(C) consider appropriate regional and operational
differences;
``(D) consider adjustments to payment rates to
account for inflation and other relevant factors; and
``(E) phase in the application of the payment rates
under the fee schedule in an efficient and fair manner.
``(3) Savings.--In establishing such fee schedule, the
Secretary shall--
``(A) ensure that the aggregate amount of payments
made for ambulance services under this part during 2000
does not exceed the aggregate amount of payments which
would have been made for such services under this part
during such year if the amendments made by section
4531(a) of the Balanced Budget Act of 1997 continued in
effect, except that in making such determination the
Secretary shall assume an update in such payments for
2002 equal to percentage increase in the consumer price
index for all urban consumers (U.S. city average) for
the 12-month period ending with June of the previous
year reduced in the case of 2001 and 2002 by 1.0
percentage points; and
``(B) set the payment amounts provided under the fee
schedule for services furnished in 2001 and each
subsequent year at amounts equal to the payment amounts
under the fee schedule for services furnished during the
previous year, increased by the percentage increase in
the consumer price index for all urban consumers (U.S.
city average) for the 12-month period ending with June
of the previous year reduced in the case of 2001 and
2002 by 1.0 percentage points.
[[Page 111 STAT. 452]]
``(4) Consultation.--In establishing the fee schedule for
ambulance services under this subsection, the Secretary shall
consult with various national organizations representing
individuals and entities who furnish and regulate ambulance
services and share with such organizations relevant data in
establishing such schedule.
``(5) Limitation on review.--There shall be no
administrative or judicial review under section 1869 or
otherwise of the amounts established under the fee schedule for
ambulance services under this subsection, including matters
described in paragraph (2).
<<NOTE: Applicability.>> ``(6) Restraint on billing.--The
provisions of subparagraphs (A) and (B) of section 1842(b)(18)
shall apply to ambulance services for which payment is made
under this subsection in the same manner as they apply to
services provided by a practitioner described in section
1842(b)(18)(C).
``(7) Coding system.--The Secretary may require the claim
for any services for which the amount of payment is determined
under this subsection to include a code (or codes) under a
uniform coding system specified by the Secretary that identifies
the services furnished.''.
<<NOTE: 42 USC 1395l note.>> (3) Effective date.--The
amendments made by this subsection shall apply to services
furnished on or after January 1, 2000.
<<NOTE: 42 USC 1395x note.>> (c) Authorizing Payment for Paramedic
Intercept Service Providers in Rural Communities.--In promulgating
regulations to carry out section 1861(s)(7) of the Social Security Act
(42 U.S.C. 1395x(s)(7)) with respect to the coverage of ambulance
service, the Secretary of Health and Human Services may include coverage
of advanced life support services (in this subsection referred to as
``ALS intercept services'') provided by a paramedic intercept service
provider in a rural area if the following conditions are met:
(1) The ALS intercept services are provided under a contract
with one or more volunteer ambulance services and are medically
necessary based on the health condition of the individual being
transported.
(2) The volunteer ambulance service involved--
(A) is certified as qualified to provide ambulance
service for purposes of such section,
(B) provides only basic life support services at the
time of the intercept, and
(C) is prohibited by State law from billing for any
services.
(3) The entity supplying the ALS intercept services--
(A) is certified as qualified to provide such
services under the medicare program under title XVIII of
the Social Security Act, and
(B) bills all recipients who receive ALS intercept
services from the entity, regardless of whether or not
such recipients are medicare beneficiaries.
[[Page 111 STAT. 453]]
SEC. 4532. DEMONSTRATION <<NOTE: 42 USC 1395m note.>> OF COVERAGE OF
AMBULANCE SERVICES UNDER MEDICARE THROUGH CONTRACTS WITH
UNITS OF LOCAL GOVERNMENT.
(a) Demonstration Project Contracts with Local Governments.--The
Secretary of Health and Human Services shall establish up to 3
demonstration projects under which, at the request of a unit of local
government, the Secretary enters into a contract with the unit of local
government under which--
(1) the unit of local government furnishes (or arranges for
the furnishing of) ambulance services for which payment may be
made under part B of title XVIII of the Social Security Act for
individuals residing in the unit of local government who are
enrolled under such part, except that the unit of local
government may not enter into the contract unless the contract
covers at least 80 percent of the individuals residing in the
unit of local government who are enrolled under such part but
not in a Medicare+Choice plan;
(2) any individual or entity furnishing ambulance services
under the contract meets the requirements otherwise applicable
to individuals and entities furnishing such services under such
part; and
(3) for each month during which the contract is in effect,
the Secretary makes a capitated payment to the unit of local
government in accordance with subsection (b).
The projects may extend over a period of not to exceed 3 years each.
(b) Amount of Payment.--
(1) In general.--The amount of the monthly payment made for
months occurring during a calendar year to a unit of local
government under a demonstration project contract under
subsection (a) shall be equal to the product of--
(A) the Secretary's estimate of the number of
individuals covered under the contract for the month;
and
(B) \1/12\ of the capitated payment rate for the
year established under paragraph (2).
(2) Capitated payment rate defined.--In this subsection, the
``capitated payment rate'' applicable to a contract under this
subsection for a calendar year is equal to 95 percent of--
(A) for the first calendar year for which the
contract is in effect, the average annual per capita
payment made under part B of title XVIII of the Social
Security Act with respect to ambulance services
furnished to such individuals during the 3 most recent
calendar years for which data on the amount of such
payment is available; and
(B) for a subsequent year, the amount provided under
this paragraph for the previous year increased by the
percentage increase in the consumer price index for all
urban consumers (U.S. city average) for the 12-month
period ending with June of the previous year.
(c) Other Terms of Contract.--The Secretary and the unit of local
government may include in a contract under this section such other terms
as the parties consider appropriate, including--
(1) covering individuals residing in additional units of
local government (under arrangements entered into between such
units and the unit of local government involved);
[[Page 111 STAT. 454]]
(2) permitting the unit of local government to transport
individuals to non-hospital providers if such providers are able
to furnish quality services at a lower cost than hospital
providers; or
(3) implementing such other innovations as the unit of local
government may propose to improve the quality of ambulance
services and control the costs of such services.
(d) Contract Payments in Lieu of Other Benefits.--Payments under a
contract to a unit of local government under this section shall be
instead of the amounts which (in the absence of the contract) would
otherwise be payable under part B of title XVIII of the Social Security
Act for the services covered under the contract which are furnished to
individuals who reside in the unit of local government.
(e) Report on Effects of Capitated Contracts.--
(1) Study.--The Secretary shall evaluate the demonstration
projects conducted under this section. Such evaluation shall
include an analysis of the quality and cost-effectiveness of
ambulance services furnished under the projects.
(2) Report.--Not later than January 1, 2000, the Secretary
shall submit a report to Congress on the study conducted under
paragraph (1), and shall include in the report such
recommendations as the Secretary considers appropriate,
including recommendations regarding modifications to the
methodology used to determine the amount of payments made under
such contracts and extending or expanding such projects.
CHAPTER 4--PROSPECTIVE PAYMENT FOR OUTPATIENT REHABILITATION SERVICES
SEC. 4541. PROSPECTIVE PAYMENT FOR OUTPATIENT REHABILITATION SERVICES.
(a) Payment Based on Fee Schedule.--
(1) Special payment rules.--Section 1833(a) (42 U.S.C.
1395l(a)) is amended--
(A) in paragraph (2) in the matter before
subparagraph (A), by inserting ``(C),'' before ``(D)'';
(B) in paragraph (3), by striking ``subparagraphs
(D) and (E) of section 1832(a)(2)'' and inserting
``section 1832(a)(2)(D)'';
(C) in paragraph (6), by striking ``and'' at the
end;
(D) in paragraph (7), by striking the period at the
end and inserting a semicolon; and
(E) by adding at the end the following new
paragraphs:
``(8) in the case of--
``(A) outpatient physical therapy services (which
includes outpatient speech-language pathology services)
and outpatient occupational therapy services furnished--
``(i) by a rehabilitation agency, public
health agency, clinic, comprehensive outpatient
rehabilitation facility, or skilled nursing
facility,
``(ii) by a home health agency to an
individual who is not homebound, or
``(iii) by another entity under an arrangement
with an entity described in clause (i) or (ii);
and
[[Page 111 STAT. 455]]
``(B) outpatient physical therapy services (which
includes outpatient speech-language pathology services)
and outpatient occupational therapy services furnished--
``(i) by a hospital to an outpatient or to a
hospital inpatient who is entitled to benefits
under part A but has exhausted benefits for
inpatient hospital services during a spell of
illness or is not so entitled to benefits under
part A, or
``(ii) by another entity under an arrangement
with a hospital described in clause (i),
the amounts described in section 1834(k); and
``(9) in the case of services described in section
1832(a)(2)(E) that are not described in paragraph (8), the
amounts described in section 1834(k).''.
(2) Payment rates.--Section 1834 (42 U.S.C. 1395m) is
amended by adding at the end the following new subsection:
``(k) Payment for Outpatient Therapy Services and Comprehensive
Outpatient Rehabilitation Services.--
``(1) In general.--With respect to services described in
section 1833(a)(8) or 1833(a)(9) for which payment is determined
under this subsection, the payment basis shall be--
``(A) for services furnished during 1998, the amount
determined under paragraph (2); or
``(B) for services furnished during a subsequent
year, 80 percent of the lesser of--
``(i) the actual charge for the services, or
``(ii) the applicable fee schedule amount (as
defined in paragraph (3)) for the services.
``(2) Payment in 1998 based upon adjusted reasonable
costs.--The amount under this paragraph for services is the
lesser of--
``(A) the charges imposed for the services, or
``(B) the adjusted reasonable costs (as defined in
paragraph (4)) for the services,
less 20 percent of the amount of the charges imposed for such
services.
``(3) Applicable fee schedule amount.--In this subsection,
the term `applicable fee schedule amount' means, with respect to
services furnished in a year, the amount determined under the
fee schedule established under section 1848 for such services
furnished during the year or, if there is no such fee schedule
established for such services, the amount determined under the
fee schedule established for such comparable services as the
Secretary specifies.
``(4) Adjusted reasonable costs.--In paragraph (2), the term
`adjusted reasonable costs' means, with respect to any services,
reasonable costs determined for such services, reduced by 10
percent. The 10-percent reduction shall not apply to services
described in section 1833(a)(8)(B) (relating to services
provided by hospitals).
``(5) Uniform coding.--For claims for services submitted on
or after April 1, 1998, for which the amount of payment is
determined under this subsection, the claim shall include a code
(or codes) under a uniform coding system specified by the
Secretary that identifies the services furnished.
``(6) Restraint <<NOTE: Applicability.>> on billing.--The
provisions of subparagraphs (A) and (B) of section 1842(b)(18)
shall apply to therapy
[[Page 111 STAT. 456]]
services for which payment is made under this subsection in the
same manner as they apply to services provided by a practitioner
described in section 1842(b)(18)(C).''.
(3) Conforming change in billing.--Section 1866(a)(2)(A)(ii)
(42 U.S.C. 1395cc(a)(2)(A)(ii)) is amended by adding at the end
the following: ``In the case of services described in section
1833(a)(8) or section 1833(a)(9) for which payment is made under
part B under section 1834(k), clause (ii) of the first sentence
shall be applied by substituting for 20 percent of the
reasonable charge for such services 20 percent of the lesser of
the actual charge or the applicable fee schedule amount (as
defined in such section) for such services.''.
(b) Application of Standards to Outpatient Occupational and Physical
Therapy Services Provided As an Incident to a Physician's Professional
Services.--Section 1862(a), as amended by sections 4319(b), 4432(b), and
4507(a)(2)(B), (42 U.S.C. 1395y(a)) is amended--
(1) by striking ``or'' at the end of paragraph (18);
(2) by striking the period at the end of paragraph (19) and
inserting ``; or''; and
(3) by inserting after paragraph (19) the following:
``(20) in the case of outpatient occupational therapy
services or outpatient physical therapy services furnished as an
incident to a physician's professional services (as described in
section 1861(s)(2)(A)), that do not meet the standards and
conditions (other than any licensing requirement specified by
the Secretary) under the second sentence of section 1861(p) (or
under such sentence through the operation of section 1861(g)) as
such standards and conditions would apply to such therapy
services if furnished by a therapist.''.
(c) Applying Financial Limitation to All Rehabilitation Services.--
Section 1833(g) (42 U.S.C. 1395l(g)) is amended--
(1) in the first sentence, by striking ``services described
in the second sentence of section 1861(p)'' and inserting
``physical therapy services of the type described in section
1861(p), but not described in section 1833(a)(8)(B), and
physical therapy services of such type which are furnished by a
physician or as incident to physicians' services'', and
(2) in the second sentence, by striking ``outpatient
occupational therapy services which are described in the second
sentence of section 1861(p) through the operation of section
1861(g)'' and inserting ``occupational therapy services (of the
type that are described in section 1861(p) (but not described in
section 1833(a)(8)(B)) through the operation of section 1861(g)
and of such type which are furnished by a physician or as
incident to physicians' services)''.
(d) Indexing Limitation.--
(1) In general.--Section 1833(g) (42 U.S.C. 1395l(g)), as
amended by subsection (c), is further amended--
(A) by striking ``$900'' each place it appears and
inserting ``the amount specified in paragraph (2) for
the year'',
(B) by inserting ``(1)'' after ``(g)'',
(C) by designating the last sentence as a paragraph
(3), and
(D) by inserting before paragraph (3), as so
designated, the following:
``(2) The amount specified in this paragraph--
[[Page 111 STAT. 457]]
``(A) for 1999, 2000, and 2001, is $1,500, and
``(B) for a subsequent year is the amount specified in this
paragraph for the preceding year increased by the percentage
increase in the MEI (as defined in section 1842(i)(3)) for such
subsequent year;
except that if an increase under subparagraph (B) for a year is not a
multiple of $10, it shall be rounded to the nearest multiple of $10.''.
(2) <<NOTE: 42 USC 1395l note.>> Report.--By not later than
January 1, 2001, the Secretary of Health and Human Services
shall submit to Congress a report that includes recommendations
on the establishment of a revised coverage policy of outpatient
physical therapy services and outpatient occupational therapy
services under the Social Security Act based on classification
of individuals by diagnostic category and prior use of services,
in both inpatient and outpatient settings, in place of the
uniform dollar limitations specified in section 1833(g) of such
Act, as amended by paragraph (1). The recommendations shall
include how such a system of durational limits by diagnostic
category might be implemented in a budget-neutral manner.
(e) Effective <<NOTE: 42 USC 1395l note.>> Dates.--
(1) The amendments made by subsections (a)(1), (a)(2), and
(b) apply to services furnished on or after January 1, 1998,
including portions of cost reporting periods occurring on or
after such date, except that section 1834(k) of the Social
Security Act (as added by subsection (a)(2)) shall not apply to
services described in section 1833(a)(8)(B) of such Act (as
added by subsection (a)(1)) that are furnished during 1998.
(2) The amendments made by subsections (a)(3) and (c) apply
to services furnished on or after January 1, 1999.
(3) The amendments made by subsection (d)(1) apply to
expenses incurred on or after January 1, 1999.
CHAPTER 5--OTHER PAYMENT PROVISIONS
SEC. 4551. PAYMENTS FOR DURABLE MEDICAL EQUIPMENT.
(a) Reduction in Payment Amounts for Items of Durable Medical
Equipment.--
(1) Freeze in update for covered items.--Section 1834(a)(14)
(42 U.S.C. 1395m(a)(14)) is amended--
(A) in subparagraph (A), by striking ``and'' at the
end;
(B) in subparagraph (B)--
(i) by striking ``a subsequent year'' and
inserting ``1993, 1994, 1995, 1996, and 1997'',
and
(ii) by striking the period at the end and
inserting a semicolon; and
(C) by adding at the end the following new
subparagraphs:
``(C) for each of the years 1998 through 2002, 0
percentage points; and
``(D) for a subsequent year, the percentage increase
in the consumer price index for all urban consumers
(U.S. urban average) for the 12-month period ending with
June of the previous year.''.
(2) Update for orthotics and prosthetics.--Section
1834(h)(4)(A) (42 U.S.C. 1395m(h)(4)(A)) is amended--
[[Page 111 STAT. 458]]
(A) in clause (iii), by striking ``, and'' at the
end and inserting a semicolon;
(B) in clause (iv), by striking ``a subsequent
year'' and inserting ``1996 and 1997''; and
(C) by adding at the end the following new clauses:
``(v) for each of the years 1998 through 2002,
1 percent, and
``(vi) for a subsequent year, the percentage
increase in the consumer price index for all urban
consumers (United States city average) for the 12-
month period ending with June of the previous
year;''.
(b) Payment <<NOTE: 42 USC 1395m note.>> Freeze for Parenteral and
Enteral Nutrients, Supplies, and Equipment.--In determining the amount
of payment under part B of title XVIII of the Social Security Act with
respect to parenteral and enteral nutrients, supplies, and equipment
during each of the years 1998 through 2002, the charges determined to be
reasonable with respect to such nutrients, supplies, and equipment may
not exceed the charges determined to be reasonable with respect to such
nutrients, supplies, and equipment during 1995.
(c) Upgraded Durable Medical Equipment.--
(1) In general.--Section 1834(a) (42 U.S.C. 1395m(a)), as
amended by section 4312(a), is amended by inserting after
paragraph (16) the following new paragraph:
``(17) Certain upgraded items.--
``(A) Individual's right to choose upgraded item.--
Notwithstanding any other provision of this title, the
Secretary may issue regulations under which an
individual may purchase or rent from a supplier an item
of upgraded durable medical equipment for which payment
would be made under this subsection if the item were a
standard item.
``(B) Payments to supplier.--In the case of the
purchase or rental of an upgraded item under
subparagraph (A)--
``(i) the supplier shall receive payment under
this subsection with respect to such item as if
such item were a standard item; and
``(ii) the individual purchasing or renting
the item shall pay the supplier an amount equal to
the difference between the supplier's charge and
the amount under clause (i).
In no event may the supplier's charge for an upgraded
item exceed the applicable fee schedule amount (if any)
for such item.
``(C) Consumer protection safeguards.--Any
regulations under subparagraph (A) shall provide for
consumer protection standards with respect to the
furnishing of upgraded equipment under subparagraph (A).
Such regulations shall provide for--
``(i) determination of fair market prices with
respect to an upgraded item;
``(ii) full disclosure of the availability and
price of standard items and proof of receipt of
such disclosure information by the beneficiary
before the furnishing of the upgraded item;
[[Page 111 STAT. 459]]
``(iii) conditions of participation for
suppliers in the billing arrangement;
``(iv) sanctions of suppliers who are
determined to engage in coercive or abusive
practices, including exclusion; and
``(v) such other safeguards as the Secretary
determines are necessary.''.
(2) Effective date.--The <<NOTE: 42 USC 1395 note.>>
amendment made by paragraph (1) shall apply to purchases or
rentals after the effective date of any regulations issued
pursuant to such amendment.
SEC. 4552. OXYGEN AND OXYGEN EQUIPMENT.
(a) In General.--Section 1834(a)(9)(B) (42 U.S.C. 1395m(a)(9)(B)) is
amended--
(1) in clause (iii), by striking ``and'' at the end;
(2) in clause (iv)--
(A) by striking ``each subsequent year'' and
inserting ``1995, 1996, and 1997'', and
(B) by striking the period at the end and inserting
a semicolon; and
(3) by adding at the end the following new clauses:
``(v) for 1998, 75 percent of the amount
determined under this subparagraph for 1997; and
``(vi) for 1999 and each subsequent year, 70
percent of the amount determined under this
subparagraph for 1997.''.
(b) Establishment of Classes for Payment.--Section 1848(a)(9) (42
U.S.C. 1395m(a)(9)) is amended by adding at the end the following new
subparagraph:
``(D) Authority to create classes.--
``(i) In general.--Subject to clause (ii), the
Secretary may establish separate classes for any
item of oxygen and oxygen equipment and separate
national limited monthly payment rates for each of
such classes.
``(ii) Budget neutrality.--The Secretary may
take actions under clause (i) only to the extent
such actions do not result in expenditures for any
year to be more or less than the expenditures
which would have been made if such actions had not
been taken.''.
(c) Standards.--The <<NOTE: 42 USC 1395m note.>> Secretary shall as
soon as practicable establish service standards for persons seeking
payment under part B of title XVIII of the Social Security Act for the
providing of oxygen and oxygen equipment to beneficiaries within their
homes.
(d) Access to <<NOTE: 42 USC 1395m note.>> Home Oxygen Equipment.--
(1) Study.--The <<NOTE: Reports.>> Comptroller General of
the United States shall study issues relating to access to home
oxygen equipment and shall, within 18 months after the date of
the enactment of this Act, report to the Committees on Commerce
and Ways and Means of the House of Representatives and the
Committee on Finance of the Senate the results of the study,
including recommendations (if any) for legislation.
(2) Peer review evaluation.--The Secretary of Health and
Human Services shall arrange for peer review organizations
established under section 1154 of the Social Security Act to
evaluate access to, and quality of, home oxygen equipment.
(e) Effective <<NOTE: 42 USC 1395m note.>> Date.--
[[Page 111 STAT. 460]]
(1) Oxygen.--The amendments made by subsection (a) shall
apply to items furnished on and after January 1, 1998.
(2) Other provisions.--The amendments made by this section
other than subsection (a) shall take effect on the date of the
enactment of this Act.
SEC. 4553. REDUCTION IN UPDATES TO PAYMENT AMOUNTS FOR CLINICAL
DIAGNOSTIC LABORATORY TESTS; STUDY ON LABORATORY TESTS.
(a) Change in Update.--Section 1833(h)(2)(A)(ii)(IV) (42 U.S.C.
1395l(h)(2)(A)(ii)(IV)) is amended by inserting ``and 1998 through
2002'' after ``1995''.
(b) Lowering Cap on Payment Amounts.--Section 1833(h)(4)(B) (42
U.S.C. 1395l(h)(4)(B)) is amended--
(1) in clause (vi), by striking ``and'' at the end;
(2) in clause (vii)--
(A) by inserting ``and before January 1, 1998,''
after ``1995,'', and
(B) by striking the period at the end and inserting
``, and''; and
(3) by adding at the end the following new clause:
``(viii) after December 31, 1997, is equal to 74 percent of
such median.''.
(c) Study <<NOTE: 42 USC 1395l note.>> and Report on Clinical
Laboratory Tests.--
(1) In general.--The Secretary shall request the Institute
of Medicine of the National Academy of Sciences to conduct a
study of payments under part B of title XVIII of the Social
Security Act for clinical laboratory tests. The study shall
include a review of the adequacy of the current methodology and
recommendations regarding alternative payment systems. The study
shall also analyze and discuss the relationship between such
payment systems and access to high quality laboratory tests for
medicare beneficiaries, including availability and access to new
testing methodologies.
(2) Report to congress.--The Secretary shall, not later than
2 years after the date of enactment of this section, report to
the Committees on Ways and Means and Commerce of the House of
Representatives and the Committee on Finance of the Senate the
results of the study described in paragraph (1), including any
recommendations for legislation.
SEC. 4554. IMPROVEMENTS <<NOTE: 42 USC 1395u note.>> IN ADMINISTRATION
OF LABORATORY TESTS BENEFIT.
(a) Selection of Regional Carriers.--
(1) In general.--The Secretary of Health and Human Services
(in this section referred to as the ``Secretary'') shall--
(A) divide the United States into no more than 5
regions, and
(B) designate a single carrier for each such region,
for the purpose of payment of claims under part B of title XVIII
of the Social Security Act with respect to clinical diagnostic
laboratory tests furnished on or after such date (not later than
July 1, 1999) as the Secretary specifies.
(2) Designation.--In designating such carriers, the
Secretary shall consider, among other criteria--
(A) a carrier's timeliness, quality, and experience
in claims processing, and
[[Page 111 STAT. 461]]
(B) a carrier's capacity to conduct electronic data
interchange with laboratories and data matches with
other carriers.
(3) Single data resource.--The Secretary shall select one of
the designated carriers to serve as a central statistical
resource for all claims information relating to such clinical
diagnostic laboratory tests handled by all the designated
carriers under such part.
(4) Allocation of claims.--The allocation of claims for
clinical diagnostic laboratory tests to particular designated
carriers shall be based on whether a carrier serves the
geographic area where the laboratory specimen was collected or
other method specified by the Secretary.
(5) Secretarial exclusion.--Paragraph (1) shall not apply
with respect to clinical diagnostic laboratory tests furnished
by physician office laboratories if the Secretary determines
that such offices would be unduly burdened by the application of
billing responsibilities with respect to more than one carrier.
(b) Adoption of National Policies for Clinical Laboratory Tests
Benefit.--
(1) In general.--Not later than January 1, 1999, the
Secretary shall first adopt, consistent with paragraph (2),
national coverage and administrative policies for clinical
diagnostic laboratory tests under part B of title XVIII of the
Social Security Act, using a negotiated rulemaking process under
subchapter III of chapter 5 of title 5, United States Code.
(2) Considerations in design of national policies.--The
policies under paragraph (1) shall be designed to promote
program integrity and national uniformity and simplify
administrative requirements with respect to clinical diagnostic
laboratory tests payable under such part in connection with the
following:
(A) Beneficiary information required to be submitted
with each claim or order for laboratory tests.
(B) The medical conditions for which a laboratory
test is reasonable and necessary (within the meaning of
section 1862(a)(1)(A) of the Social Security Act).
(C) The appropriate use of procedure codes in
billing for a laboratory test, including the unbundling
of laboratory services.
(D) The medical documentation that is required by a
medicare contractor at the time a claim is submitted for
a laboratory test in accordance with section 1833(e) of
the Social Security Act.
(E) Recordkeeping requirements in addition to any
information required to be submitted with a claim,
including physicians' obligations regarding such
requirements.
(F) Procedures for filing claims and for providing
remittances by electronic media.
(G) Limitation on frequency of coverage for the same
tests performed on the same individual.
(3) Changes in laboratory policies pending adoption of
national policy.--During the period that begins on the date of
the enactment of this Act and ends on the date the Secretary
first implements national policies pursuant to regulations
promulgated under this subsection, a carrier under such
[[Page 111 STAT. 462]]
part may implement changes relating to requirements for the
submission of a claim for clinical diagnostic laboratory tests.
(4) Use of interim policies.--After the date the Secretary
first implements such national policies, the Secretary shall
permit any carrier to develop and implement interim policies of
the type described in paragraph (1), in accordance with
guidelines established by the Secretary, in cases in which a
uniform national policy has not been established under this
subsection and there is a demonstrated need for a policy to
respond to aberrant utilization or provision of unnecessary
tests. Except as the Secretary specifically permits, no policy
shall be implemented under this paragraph for a period of longer
than 2 years.
(5) Interim national policies.--After the date the Secretary
first designates regional carriers under subsection (a), the
Secretary shall establish a process under which designated
carriers can collectively develop and implement interim national
policies of the type described in paragraph (1). No such policy
shall be implemented under this paragraph for a period of longer
than 2 years.
(6) Biennial review process.--Not less often than once every
2 years, the Secretary shall solicit and review comments
regarding changes in the national policies established under
this subsection. As part of such biennial review process, the
Secretary shall specifically review and consider whether to
incorporate or supersede interim policies developed under
paragraph (4) or (5). Based upon such review, the Secretary may
provide for appropriate changes in the national policies
previously adopted under this subsection.
(7) Requirement and notice.--The Secretary shall ensure that
any policies adopted under paragraph (3), (4), or (5) shall
apply to all laboratory claims payable under part B of title
XVIII of the Social Security Act, and shall provide for advance
notice to interested parties and a 45-day period in which such
parties may submit comments on the proposed change.
(c) Inclusion of Laboratory Representative on Carrier Advisory
Committees.--The Secretary shall direct that any advisory committee
established by a carrier to advise such carrier with respect to coverage
and administrative policies under part B of title XVIII of the Social
Security Act shall include an individual to represent the independent
clinical laboratories and such other laboratories as the Secretary deems
appropriate. The Secretary shall consider recommendations from national
and local organizations that represent independent clinical laboratories
in such selection.
SEC. 4555. UPDATES FOR AMBULATORY SURGICAL SERVICES.
Section 1833(i)(2)(C) (42 U.S.C. 1395l(i)(2)(C)) is amended by
inserting at the end the following new sentence: ``In each of the fiscal
years 1998 through 2002, the increase under this subparagraph shall be
reduced (but not below zero) by 2.0 percentage points.''.
SEC. 4556. REIMBURSEMENT FOR DRUGS AND BIOLOGICALS.
(a) In General.--Section 1842 (42 U.S.C. 1395u) is amended by
inserting after subsection (n) the following new subsection:
``(o)(1) If a physician's, supplier's, or any other person's bill or
request for payment for services includes a charge for a drug
[[Page 111 STAT. 463]]
or biological for which payment may be made under this part and the drug
or biological is not paid on a cost or prospective payment basis as
otherwise provided in this part, the amount payable for the drug or
biological is equal to 95 percent of the average wholesale price.
``(2) If payment for a drug or biological is made to a licensed
pharmacy approved to dispense drugs or biologicals under this part, the
Secretary may pay a dispensing fee (less the applicable deductible and
coinsurance amounts) to the pharmacy.''.
(b) Conforming Amendment.--Section 1833(a)(1) (42 U.S.C.
1395l(a)(1)), as amended by sections 4315(b) and 4531(b)(1), is
amended--
(1) by striking ``and (R)'' and inserting ``(R)''; and
(2) by striking the semicolon at the end and inserting the
following: ``, and (S) with respect to drugs and biologicals not
paid on a cost or prospective payment basis as otherwise
provided in this part (other than items and services described
in subparagraph (B)), the amounts paid shall be 80 percent of
the lesser of the actual charge or the payment amount
established in section 1842(o);''.
(c) Study <<NOTE: 42 USC 1395u note.>> and report.--The Secretary
of Health and Human Services shall study the effect on the average
wholesale price of drugs and biologicals of the amendments made by
subsection (a) and shall report to the Committees on Ways and Means and
Commerce of the House of Representatives and the Committee on Finance of
the Senate the result of such study not later than July 1, 1999.
(d) Effective <<NOTE: 42 USC 1395l note.>> Date.--The amendments
made by subsections (a) and (b) shall apply to drugs and biologicals
furnished on or after January 1, 1998.
SEC. 4557. COVERAGE OF ORAL ANTI-NAUSEA DRUGS UNDER CHEMOTHERAPEUTIC
REGIMEN.
(a) In General.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)), as
amended by sections 4104 and 4105, is amended--
(1) by striking ``and'' at the end of subparagraph (R); and
(2) by inserting after subparagraph (S) the following new
subparagraph:
``(T) an oral drug (which is approved by the Federal Food
and Drug Administration) prescribed for use as an acute anti-
emetic used as part of an anticancer chemotherapeutic regimen if
the drug is administered by a physician (or as prescribed by a
physician)--
``(i) for use immediately before, at, or within 48
hours after the time of the administration of the
anticancer chemotherapeutic agent; and
``(ii) as a full replacement for the anti-emetic
therapy which would otherwise be administered
intravenously.''.
(b) Effective <<NOTE: 42 USC 1395x note.>> Date.--The amendments
made by subsection (a) shall apply to items and services furnished on or
after January 1, 1998.
SEC. 4558. RENAL <<NOTE: 42 USC 1395rr note.>> DIALYSIS-RELATED
SERVICES.
(a) Auditing of Cost Reports.--Beginning with cost reports for 1996,
the Secretary shall audit cost reports of each renal dialysis provider
at least once every 3 years.
(b) Implementation of Quality Standards.--The Secretary of Health
and Human Services shall develop, by not later than
[[Page 111 STAT. 464]]
January 1, 1999, and implement, by not later than January 1, 2000, a
method to measure and report quality of renal dialysis services provided
under the medicare program under title XVIII of the Social Security Act.
SEC. 4559. TEMPORARY COVERAGE RESTORATION FOR PORTABLE ELECTROCARDIOGRAM
TRANSPORTATION.
(a) In General.--Effective <<NOTE: Effective date.>> only for
electrocardiogram tests furnished during 1998, the Secretary of Health
and Human Services shall restore separate payment, under part B of title
XVIII of the Social Security Act, for the transportation of
electrocardiogram equipment (HCPCS code R0076) based upon payment
methods in effect for such service as of December 31, 1996.
(b) Determination.--By not later than July 1, 1998, the Secretary of
Health and Human Services shall make a recommendation to the Committees
on Commerce and Ways and Means of the House of Representatives and the
Committee on Finance of the Senate as to whether coverage of portable
electrocardiogram transportation should be provided under part B of
title XVIII of the Social Security Act. In making such recommendation,
the Secretary shall take into account the study of coverage of portable
electrocardiogram transportation conducted by the Comptroller General of
the United States and other relevant information, including information
submitted by interested parties.
CHAPTER 6--PART B PREMIUM AND RELATED PROVISIONS
Subchapter A--Determination of Part B Premium Amount
SEC. 4571. PART B PREMIUM.
(a) In General.--Section 1839(a)(3) (42 U.S.C. 1395r(a)(3)) is
amended by striking the first 3 sentences and inserting the following:
``The Secretary, <<NOTE: Regulations.>> during September of each year,
shall determine and promulgate a monthly premium rate for the succeeding
calendar year that is equal to 50 percent of the monthly actuarial rate
for enrollees age 65 and over, determined according to paragraph (1),
for that succeeding calendar year.''.
(b) Conforming and Technical Amendments.--
(1) Section 1839.--Section 1839 (42 U.S.C. 1395r) is
amended--
(A) in subsection (a)(2), by striking ``(b) and
(e)'' and inserting ``(b), (c), and (f)'';
(B) in the last sentence of subsection (a)(3)--
(i) by inserting ``rate'' after ``premium'',
and
(ii) by striking ``and the derivation of the
dollar amounts specified in this paragraph'';
(C) in the first sentence of subsection (b), by
striking ``or (e)'';
(D) by striking subsection (e); and
(E) by redesignating subsection (g) as subsection
(e) and inserting that subsection after subsection (d).
(2) Section 1844.--Subparagraphs (A)(i) and (B)(i) of
section 1844(a)(1) (42 U.S.C. 1395w(a)(1)) are each amended by
striking ``or 1839(e), as the case may be''.
[[Page 111 STAT. 465]]
Subchapter B--Other Provisions Related to Part B Premium
SEC. 4581. PROTECTIONS UNDER THE MEDICARE PROGRAM FOR DISABLED WORKERS
WHO LOSE BENEFITS UNDER A GROUP HEALTH PLAN.
(a) No Premium Penalty for Late Enrollment.--The first sentence of
section 1839(b) (42 U.S.C. 1395r(b)) is amended by inserting ``and not
pursuant to a special enrollment period under section 1837(i)(4)'' after
``section 1837)''.
(b) Special Medicare Enrollment Period.--
(1) In general.--Section 1837(i) (42 U.S.C. 1395p(i)) is
amended by adding at the end the following new paragraph:
``(4)(A) In the case of an individual who is entitled to benefits
under part A pursuant to section 226(b) and--
``(i) who at the time the individual first satisfies
paragraph (1) of section 1836--
``(I) is enrolled in a group health plan described
in section 1862(b)(1)(A)(v) by reason of the
individual's current or former employment or by reason
of the current or former employment status of a member
of the individual's family, and
``(II) has elected not to enroll (or to be deemed
enrolled) under this section during the individual's
initial enrollment period; and
``(ii) whose continuous enrollment under such group health
plan is involuntarily terminated at a time when the enrollment
under the plan is not by reason of the individual's current
employment or by reason of the current employment of a member of
the individual's family,
there shall be a special enrollment period described in subparagraph
(B).
``(B) The special enrollment period referred to in subparagraph (A)
is the 6-month period beginning on the first day of the month which
includes the date of the enrollment termination described in
subparagraph (A)(ii).''.
(2) Coverage period.--Section 1838(e) (42 U.S.C. 1395q(e))
is amended--
(A) by inserting ``or 1837(i)(4)(B)'' after
``1837(i)(3)'' the first place it appears, and
(B) by inserting ``or specified in section
1837(i)(4)(A)(i)'' after ``1837(i)(3)'' the second place
it appears.
(c) Effective Date.--The <<NOTE: 42 USC 1395p note.>> amendments
made by this section shall apply to involuntary terminations of coverage
under a group health plan occurring on or after the date of the
enactment of this Act.
SEC. 4582. GOVERNMENTAL ENTITIES ELIGIBLE TO ELECT TO PAY PART B
PREMIUMS FOR ELIGIBLE INDIVIDUALS.
Section 1839(e)(1) (as amended by section 4571(b)) is amended--
(1) by inserting ``(or any appropriate State or local
governmental entity specified by the Secretary)'' after
``State'' the first place it appears, and
(2) by inserting ``(or such entity)'' after ``State'' the
second and third place it appears.
[[Page 111 STAT. 466]]
Subtitle G--Provisions Relating to Parts A and B
CHAPTER 1--HOME HEALTH SERVICES AND BENEFITS
Subchapter A--Payments For Home Health Services
SEC. 4601. RECAPTURING SAVINGS RESULTING FROM TEMPORARY FREEZE ON
PAYMENT INCREASES FOR HOME HEALTH SERVICES.
(a) Basing Updates to Per Visit Cost Limits on Limits for Fiscal
Year 1993.--Section 1861(v)(1)(L) (42 U.S.C. 1395x(v)(1)(L)) is amended
by adding at the end the following:
``(iv) In establishing limits under this subparagraph for cost
reporting periods beginning after September 30, 1997, the Secretary
shall not take into account any changes in the home health market
basket, as determined by the Secretary, with respect to cost reporting
periods which began on or after July 1, 1994, and before July 1,
1996.''.
(b) No <<NOTE: 42 USC 1395x note.>> Exceptions Permitted Based on
Amendment.--The Secretary of Health and Human Services shall not
consider the amendment made by subsection (a) in making any exemptions
and exceptions pursuant to section 1861(v)(1)(L)(ii) of the Social
Security Act (42 U.S.C. 1395x(v)(1)(L)(ii)).
SEC. 4602. INTERIM PAYMENTS FOR HOME HEALTH SERVICES.
(a) Reductions in Cost Limits.--Section 1861(v)(1)(L)(i) (42 U.S.C.
1395x(v)(1)(L)(i)) is amended--
(1) by moving the indentation of subclauses (I) through
(III) 2-ems to the left;
(2) in subclause (I), by inserting ``of the mean of the
labor-related and nonlabor per visit costs for freestanding home
health agencies'' before the comma at the end;
(3) in subclause (II), by striking ``, or'' and inserting
``of such mean,'';
(4) in subclause (III)--
(A) by inserting ``and before October 1, 1997,''
after ``July 1, 1987,'', and
(B) by striking the comma at the end and inserting
``of such mean, or''; and
(5) by striking the matter following subclause (III) and
inserting the following:
``(IV) October 1, 1997, 105 percent of the median of the
labor-related and nonlabor per visit costs for freestanding home
health agencies.''.
(b) Delay in Updates.--Section 1861(v)(1)(L)(iii) (42 U.S.C.
1395x(v)(1)(L)(iii)) is amended by inserting ``, or on or after July 1,
1997, and before October 1, 1997'' after ``July 1, 1996''.
(c) Additions to Cost Limits.--Section 1861(v)(1)(L) (42 U.S.C.
1395x(v)(1)(L)) (as amended by section 4601(a)) is amended by adding at
the end the following new clauses:
``(v) For services furnished by home health agencies for cost
reporting periods beginning on or after October 1, 1997, the Secretary
shall provide for an interim system of limits. Payment shall not exceed
the costs determined under the preceding provisions of this subparagraph
or, if lower, the product of--
[[Page 111 STAT. 467]]
``(I) an agency-specific per beneficiary annual limitation
calculated based 75 percent on 98 percent of the reasonable
costs (including nonroutine medical supplies) for the agency's
12-month cost reporting period ending during fiscal year 1994,
and based 25 percent on 98 percent of the standardized regional
average of such costs for the agency's census division, as
applied to such agency, for cost reporting periods ending during
fiscal year 1994, such costs updated by the home health market
basket index; and
``(II) the agency's unduplicated census count of patients
(entitled to benefits under this title) for the cost reporting
period subject to the limitation.
``(vi) For <<NOTE: Applicability.>> services furnished by home
health agencies for cost reporting periods beginning on or after October
1, 1997, the following rules apply:
``(I) For new providers and those providers without a 12-
month cost reporting period ending in fiscal year 1994, the per
beneficiary limitation shall be equal to the median of these
limits (or the Secretary's best estimates thereof) applied to
other home health agencies as determined by the Secretary. A
home health agency that has altered its corporate structure or
name shall not be considered a new provider for this purpose.
``(II) For beneficiaries who use services furnished by more
than one home health agency, the per beneficiary limitations
shall be prorated among the agencies.
``(vii)(I) Not later than January 1, 1998, the Secretary shall
establish per visit limits applicable for fiscal year 1998, and not
later than April 1, 1998, the Secretary shall establish per beneficiary
limits under clause (v)(I) for fiscal year 1998.
``(II) Not later than August 1 of each year (beginning in 1998) the
Secretary shall establish the limits applicable under this subparagraph
for services furnished during the fiscal year beginning October 1 of the
year.''.
(d) Development <<NOTE: 42 USC 1395fff note.>> of Case Mix
System.--The Secretary of Health and Human Services shall expand
research on a prospective payment system for home health agencies under
the medicare program that ties prospective payments to a unit of
service, including an intensive effort to develop a reliable case mix
adjuster that explains a significant amount of the variances in costs.
(e) Submission <<NOTE: Effective date. 42 USC 1395fff note.>> of
Data for Case Mix System.--Effective for cost reporting periods
beginning on or after October 1, 1997, the Secretary of Health and Human
Services may require all home health agencies to submit additional
information that the Secretary considers necessary for the development
of a reliable case mix system.
SEC. 4603. PROSPECTIVE PAYMENT FOR HOME HEALTH SERVICES.
(a) In General.--Title XVIII (42 U.S.C. 1395 et seq.) (as amended by
section 4801) is amended by adding at the end the following:
``prospective <<NOTE: 42 usc 1395fff.>> payment for home health
services
``Sec. 1895. (a) In General.--Notwithstanding section 1861(v), the
Secretary shall provide, for cost reporting periods beginning on or
after October 1, 1999, for payments for home health services in
accordance with a prospective payment system established by the
Secretary under this section.
[[Page 111 STAT. 468]]
``(b) System of Prospective Payment for Home Health Services.--
``(1) In general.--The Secretary shall establish under this
subsection a prospective payment system for payment for all
costs of home health services. Under the system under this
subsection all services covered and paid on a reasonable cost
basis under the medicare home health benefit as of the date of
the enactment of the this section, including medical supplies,
shall be paid for on the basis of a prospective payment amount
determined under this subsection and applicable to the services
involved. In implementing the system, the Secretary may provide
for a transition (of not longer than 4 years) during which a
portion of such payment is based on agency-specific costs, but
only if such transition does not result in aggregate payments
under this title that exceed the aggregate payments that would
be made if such a transition did not occur.
``(2) Unit of payment.--In defining a prospective payment
amount under the system under this subsection, the Secretary
shall consider an appropriate unit of service and the number,
type, and duration of visits provided within that unit,
potential changes in the mix of services provided within that
unit and their cost, and a general system design that provides
for continued access to quality services.
``(3) Payment basis.--
``(A) Initial basis.--
``(i) In general.--Under such system the
Secretary shall provide for computation of a
standard prospective payment amount (or amounts).
Such amount (or amounts) shall initially be based
on the most current audited cost report data
available to the Secretary and shall be computed
in a manner so that the total amounts payable
under the system for fiscal year 2000 shall be
equal to the total amount that would have been
made if the system had not been in effect but if
the reduction in limits described in clause (ii)
had been in effect. Such amount shall be
standardized in a manner that eliminates the
effect of variations in relative case mix and wage
levels among different home health agencies in a
budget neutral manner consistent with the case mix
and wage level adjustments provided under
paragraph (4)(A). Under the system, the Secretary
may recognize regional differences or differences
based upon whether or not the services or agency
are in an urbanized area.
``(ii) Reduction.--The reduction described in
this clause is a reduction by 15 percent in the
cost limits and per beneficiary limits described
in section 1861(v)(1)(L), as those limits are in
effect on September 30, 1999.
``(B) Annual update.--
``(i) In general.--The standard prospective
payment amount (or amounts) shall be adjusted for
each fiscal year (beginning with fiscal year 2001)
in a prospective manner specified by the Secretary
by the home health market basket percentage
increase applicable to the fiscal year involved.
[[Page 111 STAT. 469]]
``(ii) Home health market basket percentage
increase.--For purposes of this subsection, the
term `home health market basket percentage
increase' means, with respect to a fiscal year, a
percentage (estimated by the Secretary before the
beginning of the fiscal year) determined and
applied with respect to the mix of goods and
services included in home health services in the
same manner as the market basket percentage
increase under section 1886(b)(3)(B)(iii) is
determined and applied to the mix of goods and
services comprising inpatient hospital services
for the fiscal year.
``(C) Adjustment for outliers.--The Secretary shall
reduce the standard prospective payment amount (or
amounts) under this paragraph applicable to home health
services furnished during a period by such proportion as
will result in an aggregate reduction in payments for
the period equal to the aggregate increase in payments
resulting from the application of paragraph (5)
(relating to outliers).
``(4) Payment computation.--
``(A) In general.--The payment amount for a unit of
home health services shall be the applicable standard
prospective payment amount adjusted as follows:
``(i) Case mix adjustment.--The amount shall
be adjusted by an appropriate case mix adjustment
factor (established under subparagraph (B)).
``(ii) Area wage adjustment.--The portion of
such amount that the Secretary estimates to be
attributable to wages and wage-related costs shall
be adjusted for geographic differences in such
costs by an area wage adjustment factor
(established under subparagraph (C)) for the area
in which the services are furnished or such other
area as the Secretary may specify.
``(B) Establishment of case mix adjustment
factors.--The Secretary shall establish appropriate case
mix adjustment factors for home health services in a
manner that explains a significant amount of the
variation in cost among different units of services.
``(C) Establishment of area wage adjustment
factors.--The Secretary shall establish area wage
adjustment factors that reflect the relative level of
wages and wage-related costs applicable to the
furnishing of home health services in a geographic area
compared to the national average applicable level. Such
factors may be the factors used by the Secretary for
purposes of section 1886(d)(3)(E).
``(5) Outliers.--The Secretary may provide for an addition
or adjustment to the payment amount otherwise made in the case
of outliers because of unusual variations in the type or amount
of medically necessary care. The total amount of the additional
payments or payment adjustments made under this paragraph with
respect to a fiscal year may not exceed 5 percent of the total
payments projected or estimated to be made based on the
prospective payment system under this subsection in that year.
``(6) Proration of prospective payment amounts.--If a
beneficiary elects to transfer to, or receive services from,
[[Page 111 STAT. 470]]
another home health agency within the period covered by the
prospective payment amount, the payment shall be prorated
between the home health agencies involved.
``(c) Requirements for Payment Information.--With respect to home
health services furnished on or after October 1, 1998, no claim for such
a service may be paid under this title unless--
``(1) the claim has the unique identifier (provided under
section 1842(r)) for the physician who prescribed the services
or made the certification described in section 1814(a)(2) or
1835(a)(2)(A); and
``(2) in the case of a service visit described in paragraph
(1), (2), (3), or (4) of section 1861(m), the claim contains a
code (or codes) specified by the Secretary that identifies the
length of time of the service visit, as measured in 15 minute
increments.
``(d) Limitation on Review.--There shall be no administrative or
judicial review under section 1869, 1878, or otherwise of--
``(1) the establishment of a transition period under
subsection (b)(1);
``(2) the definition and application of payment units under
subsection (b)(2);
``(3) the computation of initial standard prospective
payment amounts under subsection (b)(3)(A) (including the
reduction described in clause (ii) of such subsection);
``(4) the establishment of the adjustment for outliers under
subsection (b)(3)(C);
``(5) the establishment of case mix and area wage
adjustments under subsection (b)(4); and
``(6) the establishment of any adjustments for outliers
under subsection (b)(5).''.
(b) Elimination of Periodic Interim Payments for Home Health
Agencies.--Section 1815(e)(2) (42 U.S.C. 1395g(e)(2)) is amended--
(1) by inserting ``and'' at the end of subparagraph (C),
(2) by striking subparagraph (D), and
(3) by redesignating subparagraph (E) as subparagraph (D).
(c) Conforming Amendments.--
(1) Payments under part a.--Section 1814(b) (42 U.S.C.
1395f(b)) is amended in the matter preceding paragraph (1) by
striking ``and 1886'' and inserting ``1886, and 1895''.
(2) Treatment of items and services paid under part b.--
(A) Payments under part b.--Section 1833(a)(2) (42
U.S.C. 1395l(a)(2)) is amended--
(i) by amending subparagraph (A) to read as
follows:
``(A) with respect to home health services (other
than a covered osteoporosis drug) (as defined in section
1861(kk)), the amount determined under the prospective
payment system under section 1895;'';
(ii) by striking ``and'' at the end of
subparagraph (E);
(iii) by adding ``and'' at the end of
subparagraph (F); and
(iv) by adding at the end the following new
subparagraph:
[[Page 111 STAT. 471]]
``(G) with respect to items and services described
in section 1861(s)(10)(A), the lesser of--
``(i) the reasonable cost of such services, as
determined under section 1861(v), or
``(ii) the customary charges with respect to
such services,
or, if such services are furnished by a public provider
of services, or by another provider which demonstrates
to the satisfaction of the Secretary that a significant
portion of its patients are low-income (and requests
that payment be made under this provision), free of
charge or at nominal charges to the public, the amount
determined in accordance with section 1814(b)(2);''.
(B) Requiring payment for all items and services to
be made to agency.--
(i) In general.--The first sentence of section
1842(b)(6) (42 U.S.C. 1395u(b)(6)) (as amended by
section 4432(b)(2)) is amended--
(I) by striking ``and (E)'' and
inserting ``(E)''; and
(II) by striking the period at the
end and inserting the following: ``, and
(F) in the case of home health services
furnished to an individual who (at the
time the item or service is furnished)
is under a plan of care of a home health
agency, payment shall be made to the
agency (without regard to whether or not
the item or service was furnished by the
agency, by others under arrangement with
them made by the agency, or when any
other contracting or consulting
arrangement, or otherwise).''.
(ii) Conforming amendment.--Section 1832(a)(1)
(42 U.S.C. 1395k(a)(1)) (as amended by section
4432(b)(5)(B)) is amended by striking ``section
1842(b)(6)(E);'' and inserting ``subparagraphs (E)
and (F) of section 1842(b)(6);''.
(C) Exclusions from coverage.--Section 1862(a) (42
U.S.C. 1395y(a)) (as amended by sections 4319(b),
4432(b), 4507(a)(2)(B) and 4541(b)) is amended--
(i) by striking ``or'' at the end of paragraph
(19);
(ii) by striking the period at the end of
paragraph (20) and inserting ``; or''; and
(iii) by inserting after paragraph (20) the
following:
``(21) where such expenses are for home health services
furnished to an individual who is under a plan of care of the
home health agency if the claim for payment for such services is
not submitted by the agency.''.
(d) Effective Date.--Except <<NOTE: 42 USC 1395fff note.>> as
otherwise provided, the amendments made by this section shall apply to
cost reporting periods beginning on or after October 1, 1999.
(e) Contingency.--If the <<NOTE: 42 USC 1395fff note.>> Secretary
of Health and Human Services for any reason does not establish and
implement the prospective payment system for home health services
described in section 1895(b) of the Social Security Act (as added by
subsection (a)) for cost reporting periods described in subsection (d),
for such cost reporting periods the Secretary shall provide for a
reduction by 15 percent in the cost limits and per beneficiary limits
described
[[Page 111 STAT. 472]]
in section 1861(v)(1)(L) of such Act, as those limits would otherwise be
in effect on September 30, 1999.
SEC. 4604. PAYMENT BASED ON LOCATION WHERE HOME HEALTH SERVICE IS
FURNISHED.
(a) Conditions of Participation.--Section 1891 (42 U.S.C. 1395bbb)
is amended by adding at the end the following:
``(g) Payment on Basis of Location of Service.--A home health agency
shall submit claims for payment for home health services under this
title only on the basis of the geographic location at which the service
is furnished, as determined by the Secretary.''.
(b) Wage Adjustment.--Section 1861(v)(1)(L)(iii) (42 U.S.C.
1395x(v)(1)(L)(iii)) is amended by striking ``agency is located'' and
inserting ``service is furnished''.
(c) Effective Date.--The <<NOTE: 42 USC 1395x note.>> amendments
made by this section apply to cost reporting periods beginning on or
after October 1, 1997.
Subchapter B--Home Health Benefits
SEC. 4611. MODIFICATION OF PART A HOME HEALTH BENEFIT FOR INDIVIDUALS
ENROLLED UNDER PART B.
(a) In General.--Section 1812 (42 U.S.C. 1395d) is amended--
(1) in subsection (a)(3), by striking ``home health
services'' and inserting ``for individuals not enrolled in part
B, home health services, and for individuals so enrolled, post-
institutional home health services furnished during a home
health spell of illness for up to 100 visits during such spell
of illness''; and
(2) in subsection (b), by adding after and below paragraph
(3) the following:
``Payment under this part for post-institutional home health services
furnished an individual during a home health spell of illness may not be
made for such services beginning after such services have been furnished
for a total of 100 visits such spell.''.
(b) Post-Institutional Home Health Services Defined.--Section 1861
(42 U.S.C. 1395x), as amended by sections 4103(a), 4104(a), 4105(a),
4106(a), and 4454, is amended by adding at the end the following:
``Post-Institutional Home Health Services; Home Health Spell of Illness
``(tt)(1) The term `post-institutional home health services' means
home health services furnished to an individual--
``(A) after discharge from a hospital or rural primary care
hospital in which the individual was an inpatient for not less
than 3 consecutive days before such discharge if such home
health services were initiated within 14 days after the date of
such discharge; or
``(B) after discharge from a skilled nursing facility in
which the individual was provided post-hospital extended care
services if such home health services were initiated within 14
days after the date of such discharge.
``(2) The term `home health spell of illness' with respect to any
individual means a period of consecutive days--
``(A) beginning with the first day (not included in a
previous home health spell of illness) (i) on which such
individual is
[[Page 111 STAT. 473]]
furnished post-institutional home health services, and (ii)
which occurs in a month for which the individual is entitled to
benefits under part A, and
``(B) ending with the close of the first period of 60
consecutive days thereafter on each of which the individual is
neither an inpatient of a hospital or rural primary care
hospital nor an inpatient of a facility described in section
1819(a)(1) or subsection (y)(1) nor provided home health
services.''.
(c) Maintaining Appeal Rights for Home Health Services.--Section
1869(b)(2)(B) (42 U.S.C. 1395ff(b)(2)(B)) is amended by inserting ``(or
$100 in the case of home health services)'' after ``$500''.
(d) Maintaining Seamless Administration Through Fiscal
Intermediaries.--Section 1842(b)(2) (42 U.S.C. 1395u(b)(2)) is amended
by adding at the end the following:
``(E) With respect to the payment of claims for home health services
under this part that, but for the amendments made by section 4611 of the
Balanced Budget Act of 1997, would be payable under part A instead of
under this part, the Secretary shall continue administration of such
claims through fiscal intermediaries under section 1816.''.
(e) <<NOTE: 42 USC 1395d note.>> Transition.--
(1) In general.--Notwithstanding any provision of title
XVIII of the Social Security Act, the Secretary of Health and
Human Services shall establish a transition for the aggregate
amount of expenditures that are transferred from part A, to part
B, of title XVIII of the Social Security Act, as a result of the
amendments made by this section, during each of the years during
the period beginning with 1998 and ending with 2002 according to
this subsection. Under the transition for each such year, the
Secretary shall effect such transfer, between the trust funds
under such parts, as will result in only the proportion
(specified in paragraph (2)) of such aggregate expenditures for
the year being transferred from such part A to such part B.
(2) Proportion specified.--The proportion specified in this
paragraph for--
(A) 1998 is \1/6\,
(B) 1999 is \1/3\,
(C) 2000 is \1/2\,
(D) 2001 is \2/3\, and
(E) 2002 is \5/6\.
(3) Application in establishing monthly premiums for 1998
through 2003.--
(A) In general.--For purposes only of computing the
monthly premium under section 1839 of the Social
Security Act (42 U.S.C. 1395r), the monthly actuarial
rate for enrollees age 65 and over shall be computed as
though any reference in paragraph (1) of this subsection
to 2002 were a reference to 2003 and as if the following
proportions were substituted for the proportions
specified in paragraph (2):
(i) For 1998, \1/7\.
(ii) For 1999, \2/7\.
(iii) For 2000, \3/7\.
(iv) For 2001, \4/7\.
(v) For 2002, \5/7\.
[[Page 111 STAT. 474]]
(vi) For 2003, \6/7\.
(B) No impact on government contribution.--
Subparagraph (A) does not apply in determining the
amount of the Government contribution under section 1844
of the Social Security Act (42 U.S.C. 1395w).
(f) Effective <<NOTE: 42 USC 1395d note.>> Date.--The amendments
made by this section apply to services furnished on or after January 1,
1998. For purpose of applying such amendments, any home health spell of
illness that began, but not did not end, before such date shall be
considered to have begun as of such date.
SEC. 4612. CLARIFICATION OF PART-TIME OR INTERMITTENT NURSING CARE.
(a) In General.--Section 1861(m) (42 U.S.C. 1395x(m)) is amended by
adding at the end the following: ``For purposes of paragraphs (1) and
(4), the term `part-time or intermittent services' means skilled nursing
and home health aide services furnished any number of days per week as
long as they are furnished (combined) less than 8 hours each day and 28
or fewer hours each week (or, subject to review on a case-by-case basis
as to the need for care, less than 8 hours each day and 35 or fewer
hours per week). For purposes of sections 1814(a)(2)(C) and
1835(a)(2)(A), `intermittent' means skilled nursing care that is either
provided or needed on fewer than 7 days each week, or less than 8 hours
of each day for periods of 21 days or less (with extensions in
exceptional circumstances when the need for additional care is finite
and predictable).''.
(b) Effective <<NOTE: 42 USC 1395x note.>> Date.--The amendment
made by subsection (a) applies to services furnished on or after October
1, 1997.
SEC. 4613. STUDY <<NOTE: 42 USC 1395x note.>> ON DEFINITION OF
HOMEBOUND.
(a) Study.--The Secretary of Health and Human Services shall conduct
a study of the criteria that should be applied, and the method of
applying such criteria, in the determination of whether an individual is
homebound for purposes of qualifying for receipt of benefits for home
health services under the medicare program. Such criteria shall include
the extent and circumstances under which a person may be absent from the
home but nonetheless qualify.
(b) Report.--Not later than October 1, 1998, the Secretary shall
submit a report to Congress on the study conducted under subsection (a).
The report shall include specific recommendations on such criteria and
methods.
SEC. 4614. NORMATIVE STANDARDS FOR HOME HEALTH CLAIMS DENIALS.
(a) In General.--Section 1862(a)(1) (42 U.S.C. 1395y(a)(1)) (as
amended by section 4104(c)) is amended--
(1) by striking ``and'' at the end of subparagraph (G),
(2) by striking the semicolon at the end of subparagraph (H)
and inserting ``, and'', and
(3) by inserting after subparagraph (H) the following new
subparagraph:
``(I) the frequency and duration of home health services
which are in excess of normative guidelines that the Secretary
shall establish by regulation;''.
(b) Notification.--The <<NOTE: 42 USC 1395y note.>> Secretary of
Health and Human Services may establish a process for notifying a
physician in cases
[[Page 111 STAT. 475]]
in which the number of home health visits, furnished under title XVIII
of the Social Security Act pursuant to a prescription or certification
of the physician, significantly exceeds such threshold (or thresholds)
as the Secretary specifies. The Secretary may adjust such threshold to
reflect demonstrated differences in the need for home health services
among different beneficiaries.
(c) Effective Date.--The <<NOTE: 42 USC 1395y note.>> amendments
made by this section apply to services furnished on or after October 1,
1997.
SEC. 4615. NO HOME HEALTH BENEFITS BASED SOLELY ON DRAWING BLOOD.
(a) In General.--Sections 1814(a)(2)(C) and 1835(a)(2)(A) (42 U.S.C.
1395f(a)(2)(C), 1395n(a)(2)(A)) are each amended by inserting ``(other
than solely venipuncture for the purpose of obtaining a blood sample)''
after ``skilled nursing care''.
(b) Effective <<NOTE: 42 USC 1395f note.>> Date.--The amendments
made by subsection (a) apply to home health services furnished after the
6-month period beginning after the date of enactment of this Act.
SEC. 4616. REPORTS <<NOTE: 42 USC 1395y note.>> TO CONGRESS REGARDING
HOME HEALTH COST CONTAINMENT.
(a) Estimate.--Not later than October 1, 1997, the Secretary of
Health and Human Services shall submit to the Committees on Commerce and
Ways and Means of the House of Representatives and the Committee on
Finance of the Senate a report that includes an estimate of the outlays
that will be made under parts A and B of title XVIII of the Social
Security Act for the provision of home health services during each of
fiscal years 1998 through 2002.
(b) Annual Report.--Not later than the end of each of years 1999
through 2002, the Secretary shall submit to such Committees a report
that compares the actual outlays under such parts for such services
during the fiscal year ending in the year, to the outlays estimated
under subsection (a) for such fiscal year. If the Secretary finds that
such actual outlays were greater than such estimated outlays for the
fiscal year, the Secretary shall include in the report recommendations
regarding beneficiary copayments for home health services provided under
the medicare program or such other methods as will reduce the growth in
outlays for home health services under the medicare program.
CHAPTER 2--GRADUATE MEDICAL EDUCATION
Subchapter A--Indirect Medical Education
SEC. 4621. INDIRECT GRADUATE MEDICAL EDUCATION PAYMENTS.
(a) Multiyear Transition Regarding Percentages.--
(1) In general.--Section 1886(d)(5)(B)(ii) (42 U.S.C.
1395ww(d)(5)(B)(ii)) is amended to read as follows:
``(ii) For purposes of clause (i)(II), the indirect
teaching adjustment factor is equal to c <dbl-dagger>
(((1+r) to the nth power) - 1), where `r' is the ratio
of the hospital's full-time equivalent interns and
residents to beds and `n' equals .405. For discharges
occurring--
``(I) on or after October 1, 1988, and before
October 1, 1997, `c' is equal to 1.89;
``(II) during fiscal year 1998, `c' is equal
to 1.72;
``(III) during fiscal year 1999, `c' is equal
to 1.6;
[[Page 111 STAT. 476]]
``(IV) during fiscal year 2000, `c' is equal
to 1.47; and
``(V) on or after October 1, 2000, `c' is
equal to 1.35.''.
(2) Conforming amendment relating to determination of
standardized amount.--Section 1886(d)(2)(C)(i) (42 U.S.C.
1395ww(d)(2)(C)(i)) is amended by adding at the end the
following: ``except that the Secretary shall not take into
account any reduction in the amount of additional payments under
paragraph (5)(B)(ii) resulting from the amendment made by
section 4621(a)(1) of the Balanced Budget Act of 1997,''.
(b) Limitation on Number of Residents for Certain Fiscal Years.--
(1) In general.--Section 1886(d)(5)(B) (42 U.S.C.
1395ww(d)(5)(B)) is amended by adding after clause (iv) the
following:
``(v) In determining the adjustment with respect to
a hospital for discharges occurring on or after October
1, 1997, the total number of full-time equivalent
interns and residents in the fields of allopathic and
osteopathic medicine in either a hospital or nonhospital
setting may not exceed the number of such full-time
equivalent interns and residents in the hospital with
respect to the hospital's most recent cost reporting
period ending on or before December 31, 1996.
``(vi) For purposes of clause (ii)--
``(I) `r' may not exceed the ratio of the
number of interns and residents, subject to the
limit under clause (v), with respect to the
hospital for its most recent cost reporting period
to the hospital's available beds (as defined by
the Secretary) during that cost reporting period,
and
``(II) for the hospital's cost reporting
periods beginning on or after October 1, 1997,
subject to the limits described in clauses (iv)
and (v), the total number of full-time equivalent
residents for payment purposes shall equal the
average of the actual full-time equivalent
resident count for the cost reporting period and
the preceding two cost reporting periods.
In the case of the first cost reporting period beginning
on or after October 1, 1997, subclause (II) shall be
applied by using the average for such period and the
preceding cost reporting period.
``(vii) If any cost reporting period beginning on or after
October 1, 1997, is not equal to twelve months, the Secretary
shall make appropriate modifications to ensure that the average
full-time equivalent residency count pursuant to subclause (II)
of clause (vi) is based on the equivalent of full twelve-month
cost reporting periods.
``(viii) Rules <<NOTE: Applicability.>> similar to the
rules of subsection (h)(4)(H) shall apply for purposes of
clauses (v) and (vi).''.
(2) Payment for interns and residents providing off-site
services.--Section 1886(d)(5)(B)(iv) (42 U.S.C.
1395ww(d)(5)(B)(iv)) is amended to read as follows:
``(iv) Effective <<NOTE: Effective date.>> for discharges
occurring on or after October 1, 1997, all the time spent by an
intern or resident in patient care activities under an approved
medical residency training
[[Page 111 STAT. 477]]
program at an entity in a nonhospital setting shall be counted
towards the determination of full-time equivalency if the
hospital incurs all, or substantially all, of the costs for the
training program in that setting.''.
SEC. 4622. PAYMENT TO HOSPITALS OF INDIRECT MEDICAL EDUCATION COSTS FOR
MEDICARE+CHOICE ENROLLEES.
Section 1886(d) (42 U.S.C. 1395ww(d)) is amended by adding at the
end the following:
``(11) Additional payments for managed care enrollees.--
``(A) In general.--For portions of cost reporting
periods occurring on or after January 1, 1998, the
Secretary shall provide for an additional payment amount
for each applicable discharge of any subsection (d)
hospital that has an approved medical residency training
program.
``(B) Applicable discharge.--For purposes of this
paragraph, the term `applicable discharge' means the
discharge of any individual who is enrolled under a
risk-sharing contract with an eligible organization
under section 1876 and who is entitled to benefits under
part A or any individual who is enrolled with a
Medicare+Choice organization under part C.
``(C) Determination of amount.--The amount of the
payment under this paragraph with respect to any
applicable discharge shall be equal to the applicable
percentage (as defined in subsection (h)(3)(D)(ii)) of
the estimated average per discharge amount that would
otherwise have been paid under paragraph (5)(B) if the
individuals had not been enrolled as described in
subparagraph (B).
``(D) Special rule for hospitals under reimbursement
system.--The Secretary shall establish rules for the
application of this paragraph to a hospital reimbursed
under a reimbursement system authorized under section
1814(b)(3) in the same manner as it would apply to the
hospital if it were not reimbursed under such
section.''.
Subchapter B--Direct Graduate Medical Education
SEC. 4623. LIMITATION ON NUMBER OF RESIDENTS AND ROLLING AVERAGE FTE
COUNT.
Section 1886(h)(4) (42 U.S.C. 1395ww(h)(4)) is amended by adding
after subparagraph (E) the following:
``(F) Limitation on number of residents in
allopathic and osteopathic medicine.--Such rules shall
provide that for purposes of a cost reporting period
beginning on or after October 1, 1997, the total number
of full-time equivalent residents before application of
weighting factors (as determined under this paragraph)
with respect to a hospital's approved medical residency
training program in the fields of allopathic medicine
and osteopathic medicine may not exceed the number of
such full-time equivalent residents for the hospital's
most recent cost reporting period ending on or before
December 31, 1996.
[[Page 111 STAT. 478]]
``(G) Counting interns and residents for fy 1998 and
subsequent years.--
``(i) In general.--For cost reporting periods
beginning during fiscal years beginning on or
after October 1, 1997, subject to the limit
described in subparagraph (F), the total number of
full-time equivalent residents for determining a
hospital's graduate medical education payment
shall equal the average of the actual full-time
equivalent resident counts for the cost reporting
period and the preceding two cost reporting
periods.
``(ii) Adjustment for short periods.--If any
cost reporting period beginning on or after
October 1, 1997, is not equal to twelve months,
the Secretary shall make appropriate modifications
to ensure that the average full-time equivalent
resident counts pursuant to clause (i) are based
on the equivalent of full twelve-month cost
reporting periods.
``(iii) Transition rule for 1998.--In the case
of a hospital's first cost reporting period
beginning on or after October 1, 1997, clause (i)
shall be applied by using the average for such
period and the preceding cost reporting period.
``(H) Special rules for application of subparagraphs
(f) and (g).--
``(i) New facilities.--The Secretary shall,
consistent with the principles of subparagraphs
(F) and (G), prescribe rules for the application
of such subparagraphs in the case of medical
residency training programs established on or
after January 1, 1995. In promulgating such rules
for purposes of subparagraph (F), the Secretary
shall give special consideration to facilities
that meet the needs of underserved rural areas.
``(ii) Aggregation.--The Secretary may
prescribe rules which allow institutions which are
members of the same affiliated group (as defined
by the Secretary) to elect to apply the limitation
of subparagraph (F) on an aggregate basis.
``(iii) Data collection.--The Secretary may
require any entity that operates a medical
residency training program and to which
subparagraphs (F) and (G) apply to submit to the
Secretary such additional information as the
Secretary considers necessary to carry out such
subparagraphs.''.
SEC. 4624. PAYMENTS TO HOSPITALS FOR DIRECT COSTS OF GRADUATE MEDICAL
EDUCATION OF MEDICARE+CHOICE ENROLLEES.
Section 1886(h)(3) (42 U.S.C. 1395ww(h)(3)) is amended by adding
after subparagraph (C) the following:
``(D) Payment for managed care enrollees.--
``(i) In general.--For portions of cost
reporting periods occurring on or after January 1,
1998, the Secretary shall provide for an
additional payment amount under this subsection
for services furnished to individuals who are
enrolled under a risk-sharing contract with an
eligible organization under section
[[Page 111 STAT. 479]]
1876 and who are entitled to part A or with a
Medicare+Choice organization under part C. The
amount of such a payment shall equal the
applicable percentage of the product of--
``(I) the aggregate approved amount
(as defined in subparagraph (B)) for
that period; and
``(II) the fraction of the total
number of inpatient-bed days (as
established by the Secretary) during the
period which are attributable to such
enrolled individuals.
``(ii) Applicable percentage.--For purposes of
clause (i), the applicable percentage is--
``(I) 20 percent in 1998,
``(II) 40 percent in 1999,
``(III) 60 percent in 2000, and
``(IV) 80 percent in 2001, and
``(V) 100 percent in 2002 and
subsequent years.
``(iii) Special rule for hospitals under
reimbursement system.--The Secretary shall
establish rules for the application of this
subparagraph to a hospital reimbursed under a
reimbursement system authorized under section
1814(b)(3) in the same manner as it would apply to
the hospital if it were not reimbursed under such
section.''.
SEC. 4625. PERMITTING PAYMENT TO NONHOSPITAL PROVIDERS.
(a) In General.--Section 1886 (42 U.S.C. 1395ww), as amended by
section 4421(a), is amended by adding at the end the following:
``(k) Payment to Nonhospital Providers.--
``(1) In general.--For cost reporting periods beginning on
or after October 1, 1997, the Secretary may establish rules for
payment to qualified nonhospital providers for their direct
costs of medical education, if those costs are incurred in the
operation of an approved medical residency training program
described in subsection (h). Such rules shall specify the
amounts, form, and manner in which such payments will be made
and the portion of such payments that will be made from each of
the trust funds under this title.
``(2) Qualified nonhospital providers.--For purposes of this
subsection, the term `qualified nonhospital providers' means--
``(A) a Federally qualified health center, as
defined in section 1861(aa)(4);
``(B) a rural health clinic, as defined in section
1861(aa)(2);
``(C) Medicare+Choice organizations; and
``(D) such other providers (other than hospitals) as
the Secretary determines to be appropriate.''.
(b) Prohibition on Double Payments.--Section 1886(h)(3)(B) (42
U.S.C. 1395ww(h)(3)(B)) is amended by adding at the end the following:
``The Secretary shall reduce the aggregate approved amount to
the extent payment is made under subsection (k) for residents
included in the hospital's count of full-time equivalent
residents.''.
[[Page 111 STAT. 480]]
SEC. 4626. INCENTIVE PAYMENTS UNDER PLANS FOR VOLUNTARY REDUCTION IN
NUMBER OF RESIDENTS.
(a) In General.--Section 1886(h) (42 U.S.C. 1395ww(h)) is amended by
adding at the end the following new paragraph:
``(6) Incentive payment under plans for voluntary reduction
in number of residents.--
``(A) In general.--In the case of a voluntary
residency reduction plan for which an application is
approved under subparagraph (B), subject to subparagraph
(F), each hospital which is part of the qualifying
entity submitting the plan shall be paid an applicable
hold harmless percentage (as specified in subparagraph
(E)) of the sum of--
``(i) the amount (if any) by which--
``(I) the amount of payment which
would have been made under this
subsection if there had been a 5-percent
reduction in the number of full-time
equivalent residents in the approved
medical education training programs of
the hospital as of June 30, 1997,
exceeds
``(II) the amount of payment which
is made under this subsection, taking
into account the reduction in such
number effected under the reduction
plan; and
``(ii) the amount of the reduction in payment
under subsection (d)(5)(B) for the hospital that
is attributable to the reduction in number of
residents effected under the plan below 95 percent
of the number of full-time equivalent residents in
such programs of the hospital as of June 30, 1997.
The determination of the amounts under clauses (i) and
(ii) for any year shall be made on the basis of the
provisions of this title in effect on the application
deadline date for the first calendar year to which the
reduction plan applies.
``(B) Approval of plan applications.--The Secretary
may not approve the application of an qualifying entity
unless--
``(i) the application is submitted in a form
and manner specified by the Secretary and by not
later than November 1, 1999,
``(ii) the application provides for the
operation of a plan for the reduction in the
number of full-time equivalent residents in the
approved medical residency training programs of
the entity consistent with the requirements of
subparagraph (D);
``(iii) the entity elects in the application
the period of residency training years (not
greater than 5) over which the reduction will
occur;
``(iv) the entity will not reduce the
proportion of its residents in primary care (to
the total number of residents) below such
proportion as in effect as of the applicable time
described in subparagraph (D)(v); and
``(v) the Secretary determines that the
application and the entity and such plan meet such
other requirements as the Secretary specifies in
regulations.
``(C) Qualifying entity.--For purposes of this
paragraph, any of the following may be a qualifying
entity:
[[Page 111 STAT. 481]]
``(i) Individual hospitals operating one or
more approved medical residency training programs.
``(ii) Two or more hospitals that operate such
programs and apply for treatment under this
paragraph as a single qualifying entity.
``(iii) A qualifying consortium (as described
in section 4628 of the Balanced Budget Act of
1997).
``(D) Residency reduction requirements.--
``(i) Individual hospital applicants.--In the
case of a qualifying entity described in
subparagraph (C)(i), the number of full-time
equivalent residents in all the approved medical
residency training programs operated by or through
the entity shall be reduced as follows:
``(I) If the base number of
residents exceeds 750 residents, by a
number equal to at least 20 percent of
such base number.
``(II) Subject to subclause (IV), if
the base number of residents exceeds 600
but is less than 750 residents, by 150
residents.
``(III) Subject to subclause (IV),
if the base number of residents does not
exceed 600 residents, by a number equal
to at least 25 percent of such base
number.
``(IV) In the case of a qualifying
entity which is described in clause (v)
and which elects treatment under this
subclause, by a number equal to at least
20 percent of the base number.
``(ii) Joint applicants.--In the case of a
qualifying entity described in subparagraph
(C)(ii), the number of full-time equivalent
residents in the aggregate for all the approved
medical residency training programs operated by or
through the entity shall be reduced as follows:
``(I) Subject to subclause (II), by
a number equal to at least 25 percent of
the base number.
``(II) In the case of such a
qualifying entity which is described in
clause (v) and which elects treatment
under this subclause, by a number equal
to at least 20 percent of the base
number.
``(iii) Consortia.--In the case of a
qualifying entity described in subparagraph
(C)(iii), the number of full-time equivalent
residents in the aggregate for all the approved
medical residency training programs operated by or
through the entity shall be reduced by a number
equal to at least 20 percent of the base number.
``(iv) Manner of reduction.--The reductions
specified under the preceding provisions of this
subparagraph for a qualifying entity shall be
below the base number of residents for that entity
and shall be fully effective not later than the
5th residency training year in which the
application under subparagraph (B) is effective.
``(v) Entities providing assurance of increase
in primary care residents.--An entity is described
in this clause if--
[[Page 111 STAT. 482]]
``(I) the base number of residents
for the entity is less than 750 or the
entity is described in subparagraph
(C)(ii); and
``(II) the entity represents in its
application under subparagraph (B) that
it will increase the number of full-time
equivalent residents in primary care by
at least 20 percent (from such number
included in the base number of
residents) by not later than the 5th
residency training year in which the
application under subparagraph (B) is
effective.
If a qualifying entity fails to comply with the
representation described in subclause (II) by the
end of such 5th residency training year, the
entity shall be subject to repayment of all
amounts paid under this paragraph, in accordance
with procedures established to carry out
subparagraph (F).
``(vi) Base number of residents defined.--For
purposes of this paragraph, the term `base number
of residents' means, with respect to a qualifying
entity (or its participating hospitals) operating
approved medical residency training programs, the
number of full-time equivalent residents in such
programs (before application of weighting factors)
of the entity as of the most recent residency
training year ending before June 30, 1997, or, if
less, for any subsequent residency training year
that ends before the date the entity makes
application under this paragraph.
``(E) Applicable hold harmless percentage.--For
purposes of subparagraph (A), the `applicable hold
harmless percentage' for the--
``(i) first and second residency training
years in which the reduction plan is in effect,
100 percent,
``(ii) third such year, 75 percent,
``(iii) fourth such year, 50 percent, and
``(iv) fifth such year, 25 percent.
``(F) Penalty for noncompliance.--
``(i) In general.--No payment may be made
under this paragraph to a hospital for a residency
training year if the hospital has failed to reduce
the number of full-time equivalent residents (in
the manner required under subparagraph (D)) to the
number agreed to by the Secretary and the
qualifying entity in approving the application
under this paragraph with respect to such year.
``(ii) Increase in number of residents in
subsequent years.--If payments are made under this
paragraph to a hospital, and if the hospital
increases the number of full-time equivalent
residents above the number of such residents
permitted under the reduction plan as of the
completion of the plan, then, as specified by the
Secretary, the entity is liable for repayment to
the Secretary of the total amounts paid under this
paragraph to the entity.
[[Page 111 STAT. 483]]
``(G) Treatment <<NOTE: Rules.>> of rotating
residents.--In applying this paragraph, the Secretary
shall establish rules regarding the counting of
residents who are assigned to institutions the medical
residency training programs in which are not covered
under approved applications under this paragraph.''.
(b) Relation <<NOTE: 42 USC 1395ww note.>> to Demonstration
Projects and Authority.--
(1) Section 1886(h)(6) of the Social Security Act, added by
subsection (a), other than subparagraph (F)(ii) thereof, shall
not apply to any residency training program with respect to
which a demonstration project described in paragraph (3) has
been approved by the Health Care Financing Administration as of
May 27, 1997.
(2) Effective <<NOTE: Effective date.>> May 27, 1997, the
Secretary of Health and Human Services is not authorized to
approve any demonstration project described in paragraph (3) for
any residency training year beginning before July 1, 2006.
(3) A demonstration project described in this paragraph is a
project that primarily provides for additional payments under
title XVIII of the Social Security Act in connection with a
reduction in the number of residents in a medical residency
training program.
(c) Interim, Final Regulations.--In order to carry out the amendment
made by subsection (a) in a timely manner, the Secretary of Health and
Human Services may first promulgate regulations, that take effect on an
interim basis, after notice and pending opportunity for public comment,
by not later than 6 months after the date of the enactment of this Act.
SEC. 4627. MEDICARE SPECIAL REIMBURSEMENT RULE FOR PRIMARY CARE COMBINED
RESIDENCY PROGRAMS.
(a) In General.--Section 1886(h)(5)(G) of the Social Security Act
(42 U.S.C. 1395ww(h)(5)(G)) is amended--
(1) in clause (i), by striking ``and (iii)'' and inserting
``, (iii), and (iv)''; and
(2) by adding at the end the following:
``(iv) Special rule for certain primary care
combined residency programs.--(I) In the case of a
resident enrolled in a combined medical residency
training program in which all of the individual
programs (that are combined) are for training a
primary care resident (as defined in subparagraph
(H)), the period of board eligibility shall be the
minimum number of years of formal training
required to satisfy the requirements for initial
board eligibility in the longest of the individual
programs plus one additional year.
``(II) A resident enrolled in a combined
medical residency training program that includes
an obstetrics and gynecology program shall qualify
for the period of board eligibility under
subclause (I) if the other programs such resident
combines with such obstetrics and gynecology
program are for training a primary care
resident.''.
(b) Effective <<NOTE: 42 USC 1395ww note.>> Date.--The amendments
made by subsection (a) apply to combined medical residency training
programs in effect for residency years beginning on or after July 1,
1997.
[[Page 111 STAT. 484]]
SEC. 4628. DEMONSTRATION <<NOTE: 42 USC 1395ww note.>> PROJECT ON USE
OF CONSORTIA.
(a) In General.--The Secretary of Health and Human Services (in this
section referred to as the ``Secretary'') shall establish a
demonstration project under which, instead of making payments to
teaching hospitals pursuant to section 1886(h) of the Social Security
Act, the Secretary shall make payments under this section to each
consortium that meets the requirements of subsection (b) and that
applies to be included under the project.
(b) Qualifying Consortia.--For purposes of subsection (a), a
consortium meets the requirements of this subsection if the consortium
is in compliance with the following:
(1) The consortium consists of a teaching hospital with one
or more approved medical residency training programs and one or
more of the following entities:
(A) A school of allopathic medicine or osteopathic
medicine.
(B) Another teaching hospital, which may be a
children's hospital.
(C) A Federally qualified health center.
(D) A medical group practice.
(E) A managed care entity.
(F) An entity furnishing outpatient services.
(G) Such other entity as the Secretary determines to
be appropriate.
(2) The members of the consortium have agreed to participate
in the programs of graduate medical education that are operated
by the entities in the consortium.
(3) With respect to the receipt by the consortium of
payments made pursuant to this section, the members of the
consortium have agreed on a method for allocating the payments
among the members.
(4) The consortium meets such additional requirements as the
Secretary may establish.
(c) Amount and Source of Payment.--The total of payments to a
qualifying consortium for a fiscal year pursuant to subsection (a) shall
not exceed the amount that would have been paid under section 1886 (h)
or (k) of the Social Security Act for the teaching hospital (or
hospitals) in the consortium. Such payments shall be made in such
proportion from each of the trust funds established under title XVIII of
such Act as the Secretary specifies.
SEC. 4629. RECOMMENDATIONS <<NOTE: 42 USC 1395ww note.>> ON LONG-TERM
POLICIES REGARDING TEACHING HOSPITALS AND GRADUATE MEDICAL
EDUCATION.
(a) In General.--The Medicare Payment Advisory Commission
(established under section 1805 of the Social Security Act and in this
section referred to as the ``Commission'') shall examine and develop
recommendations on whether and to what extent medicare payment policies
and other Federal policies regarding teaching hospitals and graduate
medical education should be changed. Such recommendations shall include
recommendations regarding each of the following:
(1) Possible methodologies for making payments for graduate
medical education and the selection of entities to receive such
payments. Matters considered under this paragraph shall
include--
[[Page 111 STAT. 485]]
(A) issues regarding children's hospitals and
approved medical residency training programs in
pediatrics, and
(B) whether and to what extent payments are being
made (or should be made) for training in the nursing and
other allied health professions.
(2) Federal policies regarding international medical
graduates.
(3) The dependence of schools of medicine on service-
generated income.
(4) Whether and to what extent the needs of the United
States regarding the supply of physicians, in the aggregate and
in different specialties, will change during the 10-year period
beginning on October 1, 1997, and whether and to what extent any
such changes will have significant financial effects on teaching
hospitals.
(5) Methods for promoting an appropriate number, mix, and
geographical distribution of health professionals.
(b) Consultation.--In conducting the study under subsection (a), the
Commission shall consult with the Council on Graduate Medical Education
and individuals with expertise in the area of graduate medical
education, including--
(1) deans from allopathic and osteopathic schools of
medicine;
(2) chief executive officers (or equivalent administrative
heads) from academic health centers, integrated health care
systems, approved medical residency training programs, and
teaching hospitals that sponsor approved medical residency
training programs;
(3) chairs of departments or divisions from allopathic and
osteopathic schools of medicine, schools of dentistry, and
approved medical residency training programs in oral surgery;
(4) individuals with leadership experience from
representative fields of non-physician health professionals;
(5) individuals with substantial experience in the study of
issues regarding the composition of the health care workforce of
the United States; and
(6) individuals with expertise in health care payment
policies.
(c) Report.--Not later than 2 years after the date of the enactment
of this Act, the Commission shall submit to the Congress a report
providing its recommendations under this section and the reasons and
justifications for such recommendations.
SEC. 4630. STUDY <<NOTE: 42 USC 1395ww note.>> OF HOSPITAL OVERHEAD AND
SUPERVISORY PHYSICIAN COMPONENTS OF DIRECT MEDICAL EDUCATION
COSTS.
(a) In General.--The Secretary of Health and Human Services shall
conduct a study with respect to--
(1) variations among hospitals in the hospital overhead and
supervisory physician components of their direct medical
education costs taken into account under section 1886(h) of the
Social Security Act, and
(2) the reasons for such variations.
(b) Report.--Not later than 1 year after the date of the enactment
of this Act, the Secretary shall report the results of the study
conducted under subsection (a) to the appropriate committees of
Congress, including recommendations for legislation reducing
[[Page 111 STAT. 486]]
variations described in subsection (a) that the Secretary finds
inappropriate.
CHAPTER 3--PROVISIONS RELATING TO MEDICARE SECONDARY PAYER
SEC. 4631. PERMANENT EXTENSION AND REVISION OF CERTAIN SECONDARY PAYER
PROVISIONS.
(a) Application to Disabled Individuals in Large Group Health
Plans.--
(1) In general.--Section 1862(b)(1)(B) (42 U.S.C.
1395y(b)(1)(B)) is amended--
(A) in clause (i), by striking ``clause (iv)'' and
inserting ``clause (iii)'';
(B) by striking clause (iii); and
(C) by redesignating clause (iv) as clause (iii).
(2) Conforming amendments.--Paragraphs (1) through (3) of
section 1837(i) (42 U.S.C. 1395p(i)) and the second sentence of
section 1839(b) (42 U.S.C. 1395r(b)) are each amended by
striking ``1862(b)(1)(B)(iv)'' each place it appears and
inserting ``1862(b)(1)(B)(iii)''.
(b) Individuals With End Stage Renal Disease.--Section 1862(b)(1)(C)
(42 U.S.C. 1395y(b)(1)(C)) is amended--
(1) in the last sentence by striking ``October 1, 1998'' and
inserting ``the date of enactment of the Balanced Budget Act of
1997''; and
(2) by adding <<NOTE: Effective date.>> at the end the
following: ``Effective for items and services furnished on or
after the date of enactment of the Balanced Budget Act of 1997,
(with respect to periods beginning on or after the date that is
18 months prior to such date), clauses (i) and (ii) shall be
applied by substituting `30-month' for `12-month' each place it
appears.''.
(c) IRS-SSA-HCFA Data Match.--
(1) Social security act.--Section 1862(b)(5)(C) (42 U.S.C.
1395y(b)(5)(C)) is amended by striking clause (iii).
(2) Internal revenue code.--Section 6103(l)(12) of the
Internal Revenue Code <<NOTE: 26 USC 6103.>> of 1986 is amended
by striking subparagraph (F).
SEC. 4632. CLARIFICATION OF TIME AND FILING LIMITATIONS.
(a) Extension of Claims Filing Period.--Section 1862(b)(2)(B) (42
U.S.C. 1395y(b)(2)(B)) is amended by adding at the end the following new
clause:
``(v) Claims-filing period.--Notwithstanding
any other time limits that may exist for filing a
claim under an employer group health plan, the
United States may seek to recover conditional
payments in accordance with this subparagraph
where the request for payment is submitted to the
entity required or responsible under this
subsection to pay with respect to the item or
service (or any portion thereof) under a primary
plan within the 3-year period beginning on the
date on which the item or service was
furnished.''.
(b) Effective <<NOTE: 42 USC 1395y note.>> Date.--The amendments
made by this section apply to items and services furnished on or after
the date of the enactment of this Act.
[[Page 111 STAT. 487]]
SEC. 4633. PERMITTING RECOVERY AGAINST THIRD PARTY ADMINISTRATORS.
(a) Permitting Recovery Against Third Party Administrators of
Primary Plans.--Section 1862(b)(2)(B)(ii) (42 U.S.C. 1395y(b)(2)(B)(ii))
is amended--
(1) by striking ``under this subsection to pay'' and
inserting ``(directly, as a third-party administrator, or
otherwise) to make payment''; and
(2) by adding at the end the following: ``The United States
may not recover from a third-party administrator under this
clause in cases where the third-party administrator would not be
able to recover the amount at issue from the employer or group
health plan and is not employed by or under contract with the
employer or group health plan at the time the action for
recovery is initiated by the United States or for whom it
provides administrative services due to the insolvency or
bankruptcy of the employer or plan.''.
(b) Clarification of Beneficiary Liability.--Section 1862(b)(1) (42
U.S.C. 1395y(b)(1)) is amended by adding at the end the following new
subparagraph:
``(F) Limitation on beneficiary liability.--An
individual who is entitled to benefits under this title
and is furnished an item or service for which such
benefits are incorrectly paid is not liable for
repayment of such benefits under this paragraph unless
payment of such benefits was made to the individual.''.
(c) Effective <<NOTE: 42 USC 1395y note.>> Date.--The amendments
made by this section apply to items and services furnished on or after
the date of the enactment of this Act.
CHAPTER 4--OTHER PROVISIONS
SEC. 4641. PLACEMENT OF ADVANCE DIRECTIVE IN MEDICAL RECORD.
(a) In General.--Section 1866(f)(1)(B) (42 U.S.C. 1395cc(f)(1)(B))
is amended by striking ``in the individual's medical record'' and
inserting ``in a prominent part of the individual's current medical
record''.
(b) Effective <<NOTE: 42 USC 1395cc note.>> Date.--The amendment
made by subsection (a) shall apply to provider agreements entered into,
renewed, or extended on or after such date (not later than 1 year after
the date of the enactment of this Act) as the Secretary of Health and
Human Services specifies.
SEC. 4642. INCREASED CERTIFICATION PERIOD FOR CERTAIN ORGAN PROCUREMENT
ORGANIZATIONS.
Section 1138(b)(1)(A)(ii) (42 U.S.C. 1320b-8(b)(1)(A)(ii)) is
amended by striking ``two years'' and inserting ``2 years (4 years if
the Secretary determines appropriate for an organization on the basis of
its past practices)''.
SEC. 4643. OFFICE OF THE CHIEF ACTUARY IN THE HEALTH CARE FINANCING
ADMINISTRATION.
Section 1117 (42 U.S.C. 1317) is amended--
(1) in the heading, by inserting ``and chief actuary'' after
``the administrator'';
(2) by inserting ``(a)'' before ``The Administrator''; and
(3) by adding at the end the following:
[[Page 111 STAT. 488]]
``(b)(1) There <<NOTE: Establishment.>> is established in the
Health Care Financing Administration the position of Chief Actuary. The
Chief Actuary shall be appointed by, and in direct line of authority to,
the Administrator of such Administration. The Chief Actuary shall be
appointed from among individuals who have demonstrated, by their
education and experience, superior expertise in the actuarial sciences.
The Chief Actuary shall exercise such duties as are appropriate for the
office of the Chief Actuary and in accordance with professional
standards of actuarial independence. The Chief Actuary may be removed
only for cause.
``(2) The Chief Actuary shall be compensated at the highest rate of
basic pay for the Senior Executive Service under section 5382(b) of
title 5, United States Code.''.
SEC. 4644. CONFORMING AMENDMENTS TO COMPLY WITH CONGRESSIONAL REVIEW OF
AGENCY RULEMAKING.
(a) DRG Prospective Payment Rate Methodology.--
(1) In general.--Section 1886(d)(6) (42 U.S.C. 1395ww(d)(6))
is amended by striking ``September 1'' and inserting ``August
1''.
(2) Transition <<NOTE: Federal Register, publication. 42 USC
1395ww note.>> rule for fiscal year 1998.--With respect to the
publication in the Federal Register of the DRG prospective
payment rate methodology under such section for fiscal year
1998, the term ``60 days'' in section 801(a)(3)(A) and section
802(a) of title 5, United States Code, is deemed to be a
reference to ``30 days''.
(b) Hospital Payment Updates.--
(1) In general.--Section 1886(e) (42 U.S.C. 1395ww(e) is
amended--
(A) in paragraph (5)(A) by striking ``May 1'' and
inserting ``April 1''; and
(B) in paragraph (5)(B) by striking ``September 1''
and inserting ``August 1''.
(2) Transition <<NOTE: Federal Register, publication. 42 USC
1395ww note.>> rule for fiscal year 1998.--With respect to the
publication in the Federal Register of the appropriate change
factor for inpatient hospital services for discharges in fiscal
year 1998 under section 1886(e)(5)(B) (42 U.S.C.
1395ww(e)(5)(B)), the term ``60 days'' in section 801(a)(3)(A)
and section 802(a) of title 5, United States Code, is deemed to
be a reference to ``30 days''.
(c) Applications for Geographic Reclassification.--
(1) In general.--Section 1886(d)(10)(C) (42 U.S.C.
1395ww(d)(10)(C)) is amended in clause (ii), by striking ``the
first day of the preceding fiscal year.'' and inserting ``the
first day of the 13-month period ending on September 30 of the
preceding fiscal year.''
(2) Special rule for applications received in fiscal year
1997.--In the case of an application for a change in geographic
classification under such section for fiscal year 1999, the
Secretary of Health and Human Services shall shorten the
deadlines under such section so as to permit completion of a
final decision by the Secretary by June 15, 1998.
(d) Physician Fee Schedule.--Section 1848(b)(1) (42 U.S.C. 1395w-
4(b)(1)) is amended by striking ``Before January 1 of each year
beginning with 1992'' and inserting ``Before November 1 of the preceding
year, for each year beginning with 1998''.
[[Page 111 STAT. 489]]
Subtitle H--Medicaid
CHAPTER 1--MANAGED CARE
SEC. 4701. STATE OPTION OF USING MANAGED CARE; CHANGE IN TERMINOLOGY.
(a) Use of Managed Care Generally.--Title XIX is amended by
redesignating <<NOTE: 42 USC 1396v.>> section 1932 as section 1933 and
by inserting after section 1931 the following new section:
``provisions <<NOTE: 42 usc 1396u-2.>> relating to managed care
``Sec. 1932. (a) State Option To Use Managed Care.--
``(1) Use of medicaid managed care organizations and primary
care case managers.--
``(A) In general.--Subject to the succeeding
provisions of this section, and notwithstanding
paragraph (1), (10)(B), or (23)(A) of section 1902(a), a
State--
``(i) may require an individual who is
eligible for medical assistance under the State
plan under this title to enroll with a managed
care entity as a condition of receiving such
assistance (and, with respect to assistance
furnished by or under arrangements with such
entity, to receive such assistance through the
entity), if--
``(I) the entity and the contract
with the State meet the applicable
requirements of this section and section
1903(m) or section 1905(t), and
``(II) the requirements described in
the succeeding paragraphs of this
subsection are met; and
``(ii) may restrict the number of provider
agreements with managed care entities under the
State plan if such restriction does not
substantially impair access to services.
``(B) Definition of managed care entity.--In this
section, the term `managed care entity' means--
``(i) a medicaid managed care organization, as
defined in section 1903(m)(1)(A), that provides or
arranges for services for enrollees under a
contract pursuant to section 1903(m); and
``(ii) a primary care case manager, as defined
in section 1905(t)(2).
``(2) Special rules.--
``(A) Exemption of certain children with special
needs.--A State may not require under paragraph (1) the
enrollment in a managed care entity of an individual
under 19 years of age who--
``(i) is eligible for supplemental security
income under title XVI;
``(ii) is described in section 501(a)(1)(D);
``(iii) is described in section 1902(e)(3);
``(iv) is receiving foster care or adoption
assistance under part E of title IV; or
``(v) is in foster care or otherwise in an
out-of-home placement.
[[Page 111 STAT. 490]]
``(B) Exemption of medicare beneficiaries.--A State
may not require under paragraph (1) the enrollment in a
managed care entity of an individual who is a qualified
medicare beneficiary (as defined in section 1905(p)(1))
or an individual otherwise eligible for benefits under
title XVIII.
``(C) Indian enrollment.--A State may not require
under paragraph (1) the enrollment in a managed care
entity of an individual who is an Indian (as defined in
section 4(c) of the Indian Health Care Improvement Act
of 1976 (25 U.S.C. 1603(c)) unless the entity is one of
the following (and only if such entity is participating
under the plan):
``(i) The Indian Health Service.
``(ii) An Indian health program operated by an
Indian tribe or tribal organization pursuant to a
contract, grant, cooperative agreement, or compact
with the Indian Health Service pursuant to the
Indian Self-Determination Act (25 U.S.C. 450 et
seq.).
``(iii) An urban Indian health program
operated by an urban Indian organization pursuant
to a grant or contract with the Indian Health
Service pursuant to title V of the Indian Health
Care Improvement Act (25 U.S.C. 1601 et seq.).
``(3) Choice of coverage.--
``(A) In general.--A State must permit an individual
to choose a managed care entity from not less than two
such entities that meet the applicable requirements of
this section, and of section 1903(m) or section 1905(t).
``(B) State option.--At the option of the State, a
State shall be considered to meet the requirements of
subparagraph (A) in the case of an individual residing
in a rural area, if the State requires the individual to
enroll with a managed care entity if such entity--
``(i) permits the individual to receive such
assistance through not less than two physicians or
case managers (to the extent that at least two
physicians or case managers are available to
provide such assistance in the area), and
(ii) permits the individual to obtain such
assistance from any other provider in appropriate
circumstances (as established by the State under
regulations of the Secretary).
``(C) Treatment of certain county-operated health
insuring organizations.--A State shall be considered to
meet the requirement of subparagraph (A) if--
``(i) the managed care entity in which the
individual is enrolled is a health-insuring
organization which--
``(I) first became operational prior
to January 1, 1986, or
``(II) is described in section
9517(c)(3) of the Omnibus Budget
Reconciliation Act of 1985 (as added by
section 4734(2) of the Omnibus Budget
Reconciliation Act of 1990), and
``(ii) the individual is given a choice
between at least two providers within such entity.
[[Page 111 STAT. 491]]
``(4) Process for enrollment and termination and change of
enrollment.--As conditions under paragraph (1)(A)--
``(A) In general.--The State, enrollment broker (if
any), and managed care entity shall permit an individual
eligible for medical assistance under the State plan
under this title who is enrolled with the entity under
this title to terminate (or change) such enrollment--
``(i) for cause at any time (consistent with
section 1903(m)(2)(A)(vi)), and
``(ii) without cause--
``(I) during the 90-day period
beginning on the date the individual
receives notice of such enrollment, and
``(II) at least every 12 months
thereafter.
``(B) Notice of termination rights.--The State shall
provide for notice to each such individual of the
opportunity to terminate (or change) enrollment under
such conditions. Such notice shall be provided at least
60 days before each annual enrollment opportunity
described in subparagraph (A)(ii)(II).
``(C) Enrollment priorities.--In carrying out
paragraph (1)(A), the State shall establish a method for
establishing enrollment priorities in the case of a
managed care entity that does not have sufficient
capacity to enroll all such individuals seeking
enrollment under which individuals already enrolled with
the entity are given priority in continuing enrollment
with the entity.
``(D) Default enrollment process.--In carrying out
paragraph (1)(A), the State shall establish a default
enrollment process--
``(i) under which any such individual who does
not enroll with a managed care entity during the
enrollment period specified by the State shall be
enrolled by the State with such an entity which
has not been found to be out of substantial
compliance with the applicable requirements of
this section and of section 1903(m) or section
1905(t); and
``(ii) that takes into consideration--
``(I) maintaining existing provider-
individual relationships or
relationships with providers that have
traditionally served beneficiaries under
this title; and
``(II) if maintaining such provider
relationships is not possible, the
equitable distribution of such
individuals among qualified managed care
entities available to enroll such
individuals, consistent with the
enrollment capacities of the entities.
``(5) Provision of information.--
``(A) Information in easily understood form.--Each
State, enrollment broker, or managed care entity shall
provide all enrollment notices and informational and
instructional materials relating to such an entity under
this title in a manner and form which may be easily
understood by enrollees and potential enrollees of the
entity who are eligible for medical assistance under the
State plan under this title.
[[Page 111 STAT. 492]]
``(B) Information to enrollees and potential
enrollees.--Each managed care entity that is a medicaid
managed care organization shall, upon request, make
available to enrollees and potential enrollees in the
organization's service area information concerning the
following:
``(i) Providers.--The identity, locations,
qualifications, and availability of health care
providers that participate with the organization.
``(ii) Enrollee rights and responsibilities.--
The rights and responsibilities of enrollees.
``(iii) Grievance and appeal procedures.--The
procedures available to an enrollee and a health
care provider to challenge or appeal the failure
of the organization to cover a service.
``(iv) Information on covered items and
services.--All items and services that are
available to enrollees under the contract between
the State and the organization that are covered
either directly or through a method of referral
and prior authorization. Each managed care entity
that is a primary care case manager shall, upon
request, make available to enrollees and potential
enrollees in the organization's service area the
information described in clause (iii).
``(C) Comparative information.--A State that
requires individuals to enroll with managed care
entities under paragraph (1)(A) shall annually (and upon
request) provide, directly or through the managed care
entity, to such individuals a list identifying the
managed care entities that are (or will be) available
and information (presented in a comparative, chart-like
form) relating to the following for each such entity
offered:
``(i) Benefits and cost-sharing.--The benefits
covered and cost-sharing imposed by the entity.
``(ii) Service area.--The service area of the
entity.
``(iii) Quality and performance.--To the
extent available, quality and performance
indicators for the benefits under the entity.
``(D) Information on benefits not covered under
managed care arrangement.--A State, directly or through
managed care entities, shall, on or before an individual
enrolls with such an entity under this title, inform the
enrollee in a written and prominent manner of any
benefits to which the enrollee may be entitled to under
this title but which are not made available to the
enrollee through the entity. Such information shall
include information on where and how such enrollees may
access benefits not made available to the enrollee
through the entity.''.
(b) Change in Terminology.--
(1) In general.--Section 1903(m)(1)(A) (42 U.S.C. 1396b(m))
is amended--
(A) by striking ``The term'' and all that follows
through ``and--'' and inserting ``The term `medicaid
managed care organization' means a health maintenance
organization, an eligible organization with a contract
under section 1876 or a Medicare+Choice organization
with a contract under part C of title XVIII, a provider
sponsored organization,
[[Page 111 STAT. 493]]
or any other public or private organization, which meets
the requirement of section 1902(w) and--''; and
(B) by adding after and below clause (ii) the
following:
``An organization that is a qualified health maintenance organization
(as defined in section 1310(d) of the Public Health Service Act) is
deemed to meet the requirements of clauses (i) and (ii).''.
(2) Conforming changes in terminology.--(A) Each of the
following provisions is amended by striking ``health maintenance
organization'' and inserting ``medicaid managed care
organization'':
(i) Section 1902(a)(23) (42 U.S.C. 1396a(a)(23)).
(ii) Section 1902(a)(57) (42 U.S.C. 1396a(a)(57)).
(iii) Section 1902(p)(2) (42 U.S.C. 1396a(p)(2)).
(iv) Section 1902(w)(2)(E) (42 U.S.C.
1396a(w)(2)(E)).
(v) Section 1903(k) (42 U.S.C. 1396b(k)).
(vi) In section 1903(m)(1)(B).
(vii) In subparagraphs (A)(i) and (H)(i) of section
1903(m)(2) (42 U.S.C. 1396b(m)(2)).
(viii) Section 1903(m)(4)(A) (42 U.S.C.
1396b(m)(4)(A)), the first place it appears.
(ix) Section 1925(b)(4)(D)(iv) (42 U.S.C. 1396r-
6(b)(4)(D)(iv)).
(x) Section 1927(j)(1) (42 U.S.C. 1396r-8(j)(1)) is
amended by striking ``***Health Maintenance
Organizations, including those organizations'' and
inserting ``health maintenance organizations, including
medicaid managed care organizations''.
(B) Section 1903(m)(2)(H) (42 U.S.C. 1396b(m)(2)(H)) is
amended, in the matter following clause (iii), by striking
``health maintenance''.
(C) Clause (viii) of section 1903(w)(7)(A) (42 U.S.C.
1396b(w)(7)(A)) is amended to read as follows:
``(viii) Services of a medicaid managed care
organization with a contract under section
1903(m).''.
(D) Section 1925(b)(4)(D)(iv) (42 U.S.C. 1396r-
6(b)(4)(D)(iv)) is amended--
(i) in the heading, by striking ``hmo'' and
inserting ``medicaid managed care organization''; and
(ii) by inserting ``and the applicable requirements
of section 1932'' before the period at the end.
(c) Compliance of Contract With New Requirements.--Section
1903(m)(2)(A) (42 U.S.C. 1396b(m)(2)(A)) is amended--
(1) by striking ``and'' at the end of clause (x),
(2) by striking the period at the end of clause (xi) and
inserting ``; and''; and
(3) by adding at the end the following:
``(xi) such contract, and the entity complies with the
applicable requirements of section 1932.''.
(d) Conforming Amendments to Freedom-of-Choice and Termination of
Enrollment Requirements.--
(1) Section 1902(a)(23) (42 U.S.C. 1396a(a)(23)), as amended
by section 4724(d), is amended by striking ``and in section
1915'' and inserting ``, in section 1915, and in section
1932(a)''.
(2) Section 1903(m)(2) (42 U.S.C. 1396b(m)(2)) is amended--
(A) in paragraph (A)(vi)--
[[Page 111 STAT. 494]]
(i) by striking ``except as provided under
subparagraph (F),'',
(ii) by striking ``without cause'' and all
that follows through ``for such termination'' and
inserting ``in accordance with section
1932(a)(4);'',
(iii) by inserting ``in accordance with such
section'' after ``provides for notification''; and
(B) by striking subparagraph (F).
SEC. 4702. PRIMARY CARE CASE MANAGEMENT SERVICES AS STATE OPTION WITHOUT
NEED FOR WAIVER.
(a) In General.--Section 1905 (42 U.S.C. 1396d) is amended--
(1) in subsection (a)--
(A) by striking ``and'' at the end of paragraph
(24);
(B) by redesignating paragraph (25) as paragraph
(26) and by striking the period at the end of such
paragraph and inserting a comma; and
(C) by inserting after paragraph (24) the following
new paragraph:
``(25) primary care case management services (as defined in
subsection (t)); and''; and
(2) by adding at the end the following new subsection:
``(t)(1) The term `primary care case management services' means
case-management related services (including locating, coordinating, and
monitoring of health care services) provided by a primary care case
manager under a primary care case management contract.
``(2) The term `primary care case manager' means any of the
following that provides services of the type described in paragraph (1)
under a contract referred to in such paragraph:
``(A) A physician, a physician group practice, or an entity
employing or having other arrangements with physicians to
provide such services.
``(B) At State option--
``(i) a nurse practitioner (as described in section
1905(a)(21));
``(ii) a certified nurse-midwife (as defined in
section 1861(gg)); or
``(iii) a physician assistant (as defined in section
1861(aa)(5)).
``(3) The term `primary care case management contract' means a
contract between a primary care case manager and a State under which the
manager undertakes to locate, coordinate, and monitor covered primary
care (and such other covered services as may be specified under the
contract) to all individuals enrolled with the manager, and which--
``(A) provides for reasonable and adequate hours of
operation, including 24-hour availability of information,
referral, and treatment with respect to medical emergencies;
``(B) restricts enrollment to individuals residing
sufficiently near a service delivery site of the manager to be
able to reach that site within a reasonable time using available
and affordable modes of transportation;
``(C) provides for arrangements with, or referrals to,
sufficient numbers of physicians and other appropriate health
care professionals to ensure that services under the contract
can be furnished to enrollees promptly and without compromise to
quality of care;
[[Page 111 STAT. 495]]
``(D) prohibits discrimination on the basis of health status
or requirements for health care services in enrollment,
disenrollment, or reenrollment of individuals eligible for
medical assistance under this title;
``(E) provides for a right for an enrollee to terminate
enrollment in accordance with section 1932(a)(4); and
``(F) complies with the other applicable provisions of
section 1932.
``(4) For purposes of this subsection, the term `primary care'
includes all health care services customarily provided in accordance
with State licensure and certification laws and regulations, and all
laboratory services customarily provided by or through, a general
practitioner, family medicine physician, internal medicine physician,
obstetrician/gynecologist, or pediatrician.''.
(b) Conforming Amendments.--
(1) Application of reenrollment provisions to pccms.--
Section 1903(m)(2)(H) (42 U.S.C. 1396b(m)(2)(H)) is amended--
(A) in clause (i), by inserting before the comma the
following: ``or with a primary care case manager with a
contract described in section 1905(t)(3)''; and
(B) by inserting before the period at the end the
following: ``or with the manager described in such
clause if the manager continues to have a contract
described in section 1905(t)(3) with the State''.
(2) Conforming cross-reference.--Section 1902(j) (42 U.S.C.
1396a(j)) is amended by striking ``paragraphs (1) through (25)''
and inserting ``a numbered paragraph of''.
SEC. 4703. ELIMINATION OF 75:25 RESTRICTION ON RISK CONTRACTS.
(a) In General.--Section 1903(m)(2)(A) (42 U.S.C. 1396b(m)(2)(A)) is
amended by striking clause (ii).
(b) Conforming Amendments.--
(1) Section 1903(m)(2) (42 U.S.C. 1396b(m)(2)) is amended--
(A) by striking subparagraphs (C), (D), and (E); and
(B) in subparagraph (G), by striking ``clauses (i)
and (ii)'' and inserting ``clause (i)''.
(2) Section 1925(b)(4)(D)(iv) (42 U.S.C. 1396r-
6(b)(4)(D)(iv)) is amended by striking ``less than 50 percent''
and all that follows up to the period at the end.
SEC. 4704. INCREASED BENEFICIARY PROTECTIONS.
(a) In General.--Section 1932, as added by section 4701(a), is
amended by adding at the end the following:
``(b) Beneficiary Protections.--
``(1) Specification of benefits.--Each contract with a
managed care entity under section 1903(m) or under section
1905(t)(3) shall specify the benefits the provision (or
arrangement) for which the entity is responsible.
``(2) Assuring coverage to emergency services.--
``(A) In general.--Each contract with a medicaid
managed care organization under section 1903(m) and each
contract with a primary care case manager under section
1905(t)(3) shall require the organization or manager--
``(i) to provide coverage for emergency
services (as defined in subparagraph (B)) without
regard to prior
[[Page 111 STAT. 496]]
authorization or the emergency care provider's
contractual relationship with the organization or
manager, and
``(ii) to comply with guidelines established
under section 1852(d)(2) (respecting coordination
of post-stabilization care) in the same manner as
such guidelines apply to Medicare+Choice plans
offered under part C of title XVIII.
The requirement <<NOTE: Applicability.>> under clause
(ii) shall first apply 30 days after the date of
promulgation of the guidelines referred to in such
clause.
``(B) Emergency services defined.--In subparagraph
(A)(i), the term `emergency services' means, with
respect to an individual enrolled with an organization,
covered inpatient and outpatient services that--
``(i) are furnished by a provider that is
qualified to furnish such services under this
title, and
``(ii) are needed to evaluate or stabilize an
emergency medical condition (as defined in
subparagraph (C)).
``(C) Emergency medical condition defined.--In
subparagraph (B)(ii), the term `emergency medical
condition' means a medical condition manifesting itself
by acute symptoms of sufficient severity (including
severe pain) such that a prudent layperson, who
possesses an average knowledge of health and medicine,
could reasonably expect the absence of immediate medical
attention to result in--
``(i) placing the health of the individual
(or, with respect to a pregnant woman, the health
of the woman or her unborn child) in serious
jeopardy,
``(ii) serious impairment to bodily functions,
or
``(iii) serious dysfunction of any bodily
organ or part.
``(3) Protection of enrollee-provider communications.--
``(A) In general.--Subject to subparagraphs (B) and
(C), under a contract under section 1903(m) a medicaid
managed care organization (in relation to an individual
enrolled under the contract) shall not prohibit or
otherwise restrict a covered health care professional
(as defined in subparagraph (D)) from advising such an
individual who is a patient of the professional about
the health status of the individual or medical care or
treatment for the individual's condition or disease,
regardless of whether benefits for such care or
treatment are provided under the contract, if the
professional is acting within the lawful scope of
practice.
``(B) Construction.--Subparagraph (A) shall not be
construed as requiring a medicaid managed care
organization to provide, reimburse for, or provide
coverage of, a counseling or referral service if the
organization--
``(i) objects to the provision of such service
on moral or religious grounds; and
``(ii) in the manner and through the written
instrumentalities such organization deems
appropriate, makes available information on its
policies regarding such service to prospective
enrollees before or during
[[Page 111 STAT. 497]]
enrollment and to enrollees within 90 days after
the date that the organization adopts a change in
policy regarding such a counseling or referral
service.
Nothing in this subparagraph shall be construed to
affect disclosure requirements under State law or under
the Employee Retirement Income Security Act of 1974.
``(C) Health care professional defined.--For
purposes of this paragraph, the term `health care
professional' means a physician (as defined in section
1861(r)) or other health care professional if coverage
for the professional's services is provided under the
contract referred to in subparagraph (A) for the
services of the professional. Such term includes a
podiatrist, optometrist, chiropractor, psychologist,
dentist, physician assistant, physical or occupational
therapist and therapy assistant, speech-language
pathologist, audiologist, registered or licensed
practical nurse (including nurse practitioner, clinical
nurse specialist, certified registered nurse
anesthetist, and certified nurse-midwife), licensed
certified social worker, registered respiratory
therapist, and certified respiratory therapy technician.
``(4) Grievance procedures.--Each medicaid managed care
organization shall establish an internal grievance procedure
under which an enrollee who is eligible for medical assistance
under the State plan under this title, or a provider on behalf
of such an enrollee, may challenge the denial of coverage of or
payment for such assistance.
``(5) Demonstration of adequate capacity and services.--Each
medicaid managed care organization shall provide the State and
the Secretary with adequate assurances (in a time and manner
determined by the Secretary) that the organization, with respect
to a service area, has the capacity to serve the expected
enrollment in such service area, including assurances that the
organization--
``(A) offers an appropriate range of services and
access to preventive and primary care services for the
population expected to be enrolled in such service area,
and
``(B) maintains a sufficient number, mix, and
geographic distribution of providers of services.
``(6) Protecting enrollees against liability for payment.--
Each medicaid managed care organization shall provide that an
individual eligible for medical assistance under the State plan
under this title who is enrolled with the organization may not
be held liable--
``(A) for the debts of the organization, in the
event of the organization's insolvency,
``(B) for services provided to the individual--
``(i) in the event of the organization failing
to receive payment from the State for such
services; or
``(ii) in the event of a health care provider
with a contractual, referral, or other arrangement
with the organization failing to receive payment
from the State or the organization for such
services, or
``(C) for payments to a provider that furnishes
covered services under a contractual, referral, or other
arrangement with the organization in excess of the
amount that would
[[Page 111 STAT. 498]]
be owed by the individual if the organization had
directly provided the services.
``(7) Antidiscrimination.--A medicaid managed care
organization shall not discriminate with respect to
participation, reimbursement, or indemnification as to any
provider who is acting within the scope of the provider's
license or certification under applicable State law, solely on
the basis of such license or certification. This paragraph shall
not be construed to prohibit an organization from including
providers only to the extent necessary to meet the needs of the
organization's enrollees or from establishing any measure
designed to maintain quality and control costs consistent with
the responsibilities of the organization.
``(8) Compliance with certain maternity and mental health
requirements.--Each medicaid managed care organization shall
comply with the requirements of subpart 2 of part A of title
XXVII of the Public Health Service Act insofar as such
requirements apply and are effective with respect to a health
insurance issuer that offers group health insurance coverage.''.
(b) Protection of Enrollees Against Balance Billing Through
Subcontractors.--Section 1128B(d)(1) (42 U.S.C. 1320a-7b(d)(1)) is
amended by inserting ``(or, in the case of services provided to an
individual enrolled with a medicaid managed care organization under
title XIX under a contract under section 1903(m) or under a contractual,
referral, or other arrangement under such contract, at a rate in excess
of the rate permitted under such contract)'' before the comma at the
end.
SEC. 4705. QUALITY <<NOTE: 42 USC 1396u-2.>> ASSURANCE STANDARDS.
(a) In General.--Section 1932 is further amended by adding at the
end the following:
``(c) Quality Assurance Standards.--
``(1) Quality assessment and improvement strategy.--
``(A) In general.--If a State provides for contracts
with medicaid managed care organizations under section
1903(m), the State shall develop and implement a quality
assessment and improvement strategy consistent with this
paragraph. Such strategy shall include the following:
``(i) Access standards.--Standards for access
to care so that covered services are available
within reasonable timeframes and in a manner that
ensures continuity of care and adequate primary
care and specialized services capacity.
``(ii) Other measures.--Examination of other
aspects of care and service directly related to
the improvement of quality of care (including
grievance procedures and marketing and information
standards).
``(iii) Monitoring procedures.--Procedures for
monitoring and evaluating the quality and
appropriateness of care and services to enrollees
that reflect the full spectrum of populations
enrolled under the contract and that includes
requirements for provision of quality assurance
data to the State using the data and information
set that the Secretary has specified for use under
part C of title XVIII or such alternative
[[Page 111 STAT. 499]]
data as the Secretary approves, in consultation
with the State.
``(iv) Periodic review.--Regular, periodic
examinations of the scope and content of the
strategy.
``(B) Standards.--The strategy developed under
subparagraph (A) shall be consistent with standards that
the Secretary first establishes within 1 year after the
date of the enactment of this section. Such standards
shall not preempt any State standards that are more
stringent than such standards. <<NOTE: Applicability.>>
Guidelines relating to quality assurance that are
applied under section 1915(b)(1) shall apply under this
subsection until the effective date of standards for
quality assurance established under this subparagraph.
``(C) Monitoring.--The Secretary shall monitor the
development and implementation of strategies under
subparagraph (A).
``(D) Consultation.--The Secretary shall conduct
activities under subparagraphs (B) and (C) in
consultation with the States.
``(2) External independent review of managed care
activities.--
``(A) Review of contracts.--
``(i) In general.--Each contract under section
1903(m) with a medicaid managed care organization
shall provide for an annual (as appropriate)
external independent review conducted by a
qualified independent entity of the quality
outcomes and timeliness of, and access to, the
items and services for which the organization is
responsible under the contract. The requirement
for such a review shall not apply until after the
date that the Secretary establishes the
identification method described in clause (ii).
``(ii) Qualifications of reviewer.--The
Secretary, in consultation with the States, shall
establish a method for the identification of
entities that are qualified to conduct reviews
under clause (i).
``(iii) Use of protocols.--The Secretary, in
coordination with the National Governors'
Association, shall contract with an independent
quality review organization (such as the National
Committee for Quality Assurance) to develop the
protocols to be used in external independent
reviews conducted under this paragraph on and
after January 1, 1999.
``(iv) Availability of results.--The results
of each external independent review conducted
under this subparagraph shall be available to
participating health care providers, enrollees,
and potential enrollees of the organization,
except that the results may not be made available
in a manner that discloses the identity of any
individual patient.
``(B) Nonduplication of accreditation.--A State may
provide that, in the case of a medicaid managed care
organization that is accredited by a private independent
entity (such as those described in section 1852(e)(4))
or that has an external review conducted under section
1852(e)(3), the external review activities conducted
under subparagraph (A) with respect to the organization
shall
[[Page 111 STAT. 500]]
not be duplicative of review activities conducted as
part of the accreditation process or the external review
conducted under such section.
``(C) Deemed compliance for medicare managed care
organizations.--At the option of a State, the
requirements of subparagraph (A) shall not apply with
respect to a medicaid managed care organization if the
organization is an eligible organization with a contract
in effect under section 1876 or a Medicare+Choice
organization with a contract in effect under C of title
XVIII and the organization has had a contract in effect
under section 1903(m) at least during the previous 2-
year period.
(b) Increased FFP for External Quality Review Organizations.--
Section 1903(a)(3)(C) (42 U.S.C. 1396b(a)(3)(C)) is amended--
(1) by inserting ``(i)'' after ``(C)'', and
(2) by adding at the end the following new clause:
``(ii) 75 percent of the sums expended with respect
to costs incurred during such quarter (as found
necessary by the Secretary for the proper and efficient
administration of the State plan) as are attributable to
the performance of independent external reviews
conducted under section 1932(c)(2); and''.
(c) Studies <<NOTE: 42 USC 1396u-2 note.>> and Reports.--
(1) GAO study and report on quality assurance and
accreditation standards.--
(A) Study.--The Comptroller General of the United
States shall conduct a study and analysis of the quality
assurance programs and accreditation standards
applicable to managed care entities operating in the
private sector, or to such entities that operate under
contracts under the medicare program under title XVIII
of the Social Security Act (42 U.S.C. 1395 et seq.).
Such study shall determine--
(i) if such programs and standards include
consideration of the accessibility and quality of
the health care items and services delivered under
such contracts to low-income individuals; and
(ii) the appropriateness of applying such
programs and standards to medicaid managed care
organizations under section 1932(c) of such Act.
(B) Report.--The Comptroller General shall submit a
report to the Committee on Commerce of the House of
Representatives and the Committee on Finance of the
Senate on the study conducted under subparagraph (A).
(2) Study and report on services provided to individuals
with special health care needs.--
(A) Study.--The Secretary of Health and Human
Services, in consultation with States, managed care
organizations, the National Academy of State Health
Policy, representatives of beneficiaries with special
health care needs, experts in specialized health care,
and others, shall conduct a study concerning safeguards
(if any) that may be needed to ensure that the health
care needs of individuals with special health care needs
and chronic conditions who are enrolled with medicaid
managed care organizations are adequately met.
[[Page 111 STAT. 501]]
(B) Report.--Not later than 2 years after the date
of the enactment of this Act, the Secretary shall submit
to Committees described in paragraph (1)(B) a report on
such study.
SEC. 4706. SOLVENCY STANDARDS.
Section 1903(m)(1) (42 U.S.C. 1396b(m)(1)) is amended--
(1) in subparagraph (A)(ii), by inserting ``, meets the
requirements of subparagraph (C)(i) (if applicable),'' after
``provision is satisfactory to the State'', and
(2) by adding at the end the following:
``(C)(i) Subject to clause (ii), a provision meets the requirements
of this subparagraph for an organization if the organization meets
solvency standards established by the State for private health
maintenance organizations or is licensed or certified by the State as a
risk-bearing entity.
``(ii) Clause (i) shall not apply to an organization if--
``(I) the organization is not responsible for the provision
(directly or through arrangements with providers of services) of
inpatient hospital services and physicians' services;
``(II) the organization is a public entity;
``(III) the solvency of the organization is guaranteed by
the State; or
``(IV) the organization is (or is controlled by) one or more
Federally-qualified health centers and meets solvency standards
established by the State for such an organization.
For purposes of subclause (IV), the term `control' means the possession,
whether direct or indirect, of the power to direct or cause the
direction of the management and policies of the organization through
membership, board representation, or an ownership interest equal to or
greater than 50.1 percent.''.
SEC. 4707. PROTECTIONS <<NOTE: 42 USC 1396u-2.>> AGAINST FRAUD AND
ABUSE.
(a) In General.--Section 1932 (42 U.S.C. 1396v) is further amended
by adding at the end the following:
``(d) Protections Against Fraud and Abuse.--
``(1) Prohibiting affiliations with individuals debarred by
Federal agencies.--
``(A) In general.--A managed care entity may not
knowingly--
``(i) have a person described in subparagraph
(C) as a director, officer, partner, or person
with beneficial ownership of more than 5 percent
of the entity's equity, or
``(ii) have an employment, consulting, or
other agreement with a person described in such
subparagraph for the provision of items and
services that are significant and material to the
entity's obligations under its contract with the
State.
``(B) Effect of noncompliance.--If a State finds
that a managed care entity is not in compliance with
clause (i) or (ii) of subparagraph (A), the State--
``(i) shall notify the Secretary of such
noncompliance;
``(ii) may continue an existing agreement with
the entity unless the Secretary (in consultation
with the Inspector General of the Department of
Health and Human Services) directs otherwise; and
[[Page 111 STAT. 502]]
``(iii) may not renew or otherwise extend the
duration of an existing agreement with the entity
unless the Secretary (in consultation with the
Inspector General of the Department of Health and
Human Services) provides to the State and to
Congress a written statement describing compelling
reasons that exist for renewing or extending the
agreement.
``(C) Persons described.--A person is described in
this subparagraph if such person--
``(i) is debarred, suspended, or otherwise
excluded from participating in procurement
activities under the Federal Acquisition
Regulation or from participating in nonprocurement
activities under regulations issued pursuant to
Executive Order No. 12549 or under guidelines
implementing such order; or
``(ii) is an affiliate (as defined in such
Act) of a person described in clause (i).
``(2) Restrictions on marketing.--
``(A) Distribution of materials.--
``(i) In general.--A managed care entity, with
respect to activities under this title, may not
distribute directly or through any agent or
independent contractor marketing materials within
any State--
``(I) without the prior approval of
the State, and
``(II) that contain false or
materially misleading information.
The requirement of subclause (I) shall not apply
with respect to a State until such date as the
Secretary specifies in consultation with such
State.
``(ii) Consultation in review of market
materials.--In the process of reviewing and
approving such materials, the State shall provide
for consultation with a medical care advisory
committee.
``(B) Service market.--A managed care entity shall
distribute marketing materials to the entire service
area of such entity covered under the contract under
section 1903(m) or section 1903(t)(3).
``(C) Prohibition of tie-ins.--A managed care
entity, or any agency of such entity, may not seek to
influence an individual's enrollment with the entity in
conjunction with the sale of any other insurance.
``(D) Prohibiting marketing fraud.--Each managed
care entity shall comply with such procedures and
conditions as the Secretary prescribes in order to
ensure that, before an individual is enrolled with the
entity, the individual is provided accurate oral and
written information sufficient to make an informed
decision whether or not to enroll.
``(E) Prohibition of `cold-call' marketing.--Each
managed care entity shall not, directly or indirectly,
conduct door-to-door, telephonic, or other `cold-call'
marketing of enrollment under this title.
``(3) State conflict-of-interest safeguards in medicaid risk
contracting.--A medicaid managed care organization may not enter
into a contract with any State under section
[[Page 111 STAT. 503]]
1903(m) unless the State has in effect conflict-of-interest
safeguards with respect to officers and employees of the State
with responsibilities relating to contracts with such
organizations or to the default enrollment process described in
subsection (a)(4)(C)(ii) that are at least as effective as the
Federal safeguards provided under section 27 of the Office of
Federal Procurement Policy Act (41 U.S.C. 423), against
conflicts of interest that apply with respect to Federal
procurement officials with comparable responsibilities with
respect to such contracts.
``(4) Use of unique physician identifier for participating
physicians.--Each medicaid managed care organization shall
require each physician providing services to enrollees eligible
for medical assistance under the State plan under this title to
have a unique identifier in accordance with the system
established under section 1173(b).
``(e) Sanctions for Noncompliance.--
``(1) Use of intermediate sanctions by the state to enforce
requirements.--
``(A) In general.--A State may not enter into or
renew a contract under section 1903(m) unless the State
has established intermediate sanctions, which may
include any of the types described in paragraph (2),
other than the termination of a contract with a medicaid
managed care organization, which the State may impose
against a medicaid managed care organization with such a
contract, if the organization--
``(i) fails substantially to provide medically
necessary items and services that are required
(under law or under such organization's contract
with the State) to be provided to an enrollee
covered under the contract;
``(ii) imposes premiums or charges on
enrollees in excess of the premiums or charges
permitted under this title;
``(iii) acts to discriminate among enrollees
on the basis of their health status or
requirements for health care services, including
expulsion or refusal to reenroll an individual,
except as permitted by this title, or engaging in
any practice that would reasonably be expected to
have the effect of denying or discouraging
enrollment with the organization by eligible
individuals whose medical condition or history
indicates a need for substantial future medical
services;
``(iv) misrepresents or falsifies information
that is furnished--
``(I) to the Secretary or the State
under this title; or
``(II) to an enrollee, potential
enrollee, or a health care provider
under such title; or
``(v) fails to comply with the applicable
requirements of section 1903(m)(2)(A)(x).
The State may also impose such intermediate sanction
against a managed care entity if the State determines
that the entity distributed directly or through any
agent or independent contractor marketing materials in
violation of subsection (d)(2)(A)(i)(II).
[[Page 111 STAT. 504]]
``(B) Rule of construction.--Clause (i) of
subparagraph (A) shall not apply to the provision of
abortion services, except that a State may impose a
sanction on any medicaid managed care organization that
has a contract to provide abortion services if the
organization does not provide such services as provided
for under the contract.
``(2) Intermediate sanctions.--The sanctions described in
this paragraph are as follows:
``(A) Civil money penalties as follows:
``(i) Except as provided in clause (ii),
(iii), or (iv), not more than $25,000 for each
determination under paragraph (1)(A).
``(ii) With respect to a determination under
clause (iii) or (iv)(I) of paragraph (1)(A), not
more than $100,000 for each such determination.
``(iii) With respect to a determination under
paragraph (1)(A)(ii), double the excess amount
charged in violation of such subsection (and the
excess amount charged shall be deducted from the
penalty and returned to the individual concerned).
``(iv) Subject to clause (ii), with respect to
a determination under paragraph (1)(A)(iii),
$15,000 for each individual not enrolled as a
result of a practice described in such subsection.
``(B) The appointment of temporary management--
``(i) to oversee the operation of the medicaid
managed care organization upon a finding by the
State that there is continued egregious behavior
by the organization or there is a substantial risk
to the health of enrollees; or
``(ii) to assure the health of the
organization's enrollees, if there is a need for
temporary management while--
``(I) there is an orderly
termination or reorganization of the
organization; or
``(II) improvements are made to
remedy the violations found under
paragraph (1),
except that temporary management under this
subparagraph may not be terminated until the State
has determined that the medicaid managed care
organization has the capability to ensure that the
violations shall not recur.
``(C) Permitting individuals enrolled with the
managed care entity to terminate enrollment without
cause, and notifying such individuals of such right to
terminate enrollment.
``(D) Suspension or default of all enrollment of
individuals under this title after the date the
Secretary or the State notifies the entity of a
determination of a violation of any requirement of
section 1903(m) or this section.
``(E) Suspension of payment to the entity under this
title for individuals enrolled after the date the
Secretary or State notifies the entity of such a
determination and until the Secretary or State is
satisfied that the basis for such determination has been
corrected and is not likely to recur.
[[Page 111 STAT. 505]]
``(3) Treatment of chronic substandard entities.--In the
case of a medicaid managed care organization which has
repeatedly failed to meet the requirements of section 1903(m)
and this section, the State shall (regardless of what other
sanctions are provided) impose the sanctions described in
subparagraphs (B) and (C) of paragraph (2).
``(4) Authority to terminate contract.--
``(A) In general.--In the case of a managed care
entity which has failed to meet the requirements of this
part or a contract under section 1903(m) or 1905(t)(3),
the State shall have the authority to terminate such
contract with the entity and to enroll such entity's
enrollees with other managed care entities (or to permit
such enrollees to receive medical assistance under the
State plan under this title other than through a managed
care entity).
``(B) Availability of hearing prior to termination
of contract.--A State may not terminate a contract with
a managed care entity under subparagraph (A) unless the
entity is provided with a hearing prior to the
termination.
``(C) Notice and right to disenroll in cases of
termination hearing.--A State may--
``(i) notify individuals enrolled with a
managed care entity which is the subject of a
hearing to terminate the entity's contract with
the State of the hearing, and
``(ii) in the case of such an entity, permit
such enrollees to disenroll immediately with the
entity without cause.
``(5) Other protections for managed care entities against
sanctions imposed by state.--Before imposing any sanction
against a managed care entity other than termination of the
entity's contract, the State shall provide the entity with
notice and such other due process protections as the State may
provide, except that a State may not provide a managed care
entity with a pre-termination hearing before imposing the
sanction described in paragraph (2)(B).''.
(b) Limitation on Availability of FFP for Use of Enrollment
Brokers.--Section 1903(b) (42 U.S.C. 1396b(b)) is amended by adding at
the end the following:
``(4) Amounts expended by a State for the use an enrollment broker
in marketing medicaid managed care organizations and other managed care
entities to eligible individuals under this title shall be considered,
for purposes of subsection (a)(7), to be necessary for the proper and
efficient administration of the State plan but only if the following
conditions are met with respect to the broker:
``(A) The broker is independent of any such entity and of
any health care providers (whether or not any such provider
participates in the State plan under this title) that provide
coverage of services in the same State in which the broker is
conducting enrollment activities.
``(B) No person who is an owner, employee, consultant, or
has a contract with the broker either has any direct or indirect
financial interest with such an entity or health care provider
or has been excluded from participation in the program under
this title or title XVIII or debarred by any Federal agency, or
subject to a civil money penalty under this Act.''.
[[Page 111 STAT. 506]]
(c) Application of Disclosure Requirements to Managed Care
Entities.--Section 1124(a)(2)(A) (42 U.S.C. 1320a-3(a)(2)(A)) is amended
by inserting ``a managed care entity, as defined in section
1932(a)(1)(B),'' after ``renal disease facility,''.
SEC. 4708. IMPROVED ADMINISTRATION.
(a) Change in Threshold Amount for Contracts Requiring Secretary's
Prior Approval.--Section 1903(m)(2)(A)(iii) (42 U.S.C.
1396b(m)(2)(A)(iii)) is amended by striking ``$100,000'' and inserting
``$1,000,000 for 1998 and, for a subsequent year, the amount established
under this clause for the previous year increased by the percentage
increase in the consumer price index for all urban consumers over the
previous year''.
(b) Permitting Same Copayments in Health Maintenance Organizations
as in Fee-for-Service.--Section 1916 (42 U.S.C. 1396o) is amended--
(1) in subsection (a)(2)(D), by striking ``or services
furnished'' and all that follows through ``enrolled,''; and
(2) in subsection (b)(2)(D), by striking ``or (at the
option'' and all that follows through ``enrolled,''.
(c) Assuring Timeliness of Provider Payments.--Section 1932 is
further amended <<NOTE: 42 USC 1396u-2.>> by adding at the end the
following:
``(f) Timeliness of Payment.--A contract under section 1903(m) with
a medicaid managed care organization shall provide that the organization
shall make payment to health care providers for items and services which
are subject to the contract and that are furnished to individuals
eligible for medical assistance under the State plan under this title
who are enrolled with the organization on a timely basis consistent with
the claims payment procedures described in section 1902(a)(37)(A),
unless the health care provider and the organization agree to an
alternate payment schedule.''.
(d) Clarification of Application of FFP Denial Rules to Payments
Made Pursuant to Managed Care Entities.--Section 1903(i) (42 U.S.C.
1396b(i)) is amended by adding at the end the following new sentence:
``Paragraphs (1), (2), (16), (17), and (18) shall apply with respect to
items or services furnished and amounts expended by or through a managed
care entity (as defined in section 1932(a)(1)(B)) in the same manner as
such paragraphs apply to items or services furnished and amounts
expended directly by the State.''.
SEC. 4709. 6-MONTH GUARANTEED ELIGIBILITY FOR ALL INDIVIDUALS ENROLLED
IN MANAGED CARE.
Section 1902(e)(2) (42 U.S.C. 1396a(e)(2)) is amended--
(1) by striking ``who is enrolled'' and all that follows
through ``section 1903(m)(2)(A)'' and inserting ``who is
enrolled with a medicaid managed care organization (as defined
in section 1903(m)(1)(A)), with a primary care case manager (as
defined in section 1905(t)),''; and
(2) by inserting before the period ``or by or through the
case manager''.
SEC. 4710. EFFECTIVE <<NOTE: 42 USC 1396b note.>> DATES.
(a) General Effective Date.--Except as otherwise provided in this
chapter and section 4759, the amendments made by this chapter shall take
effect on the date of the enactment of this Act and shall apply to
contracts entered into or renewed on or after October 1, 1997.
[[Page 111 STAT. 507]]
(b) Specific Effective Dates.--Subject to subsection (c) and section
4759--
(1) PCCM option.--The amendments made by section 4702 shall
apply to primary care case management services furnished on or
after October 1, 1997.
(2) 75:25 rule.--The amendments made by section 4703 apply
to contracts under section 1903(m) of the Social Security Act
(42 U.S.C. 1396b(m)) on and after June 20, 1997.
(3) Quality standards.--Section 1932(c)(1) of the Social
Security Act, as added by section 4705(a), shall take effect on
January 1, 1999.
(4) Solvency standards.--
(A) In general.--The amendments made by section 4706
shall apply to contracts entered into or renewed on or
after October 1, 1998.
(B) Transition rule.--In the case of an organization
that as of the date of the enactment of this Act has
entered into a contract under section 1903(m) of the
Social Security Act with a State for the provision of
medical assistance under title XIX of such Act under
which the organization assumes full financial risk and
is receiving capitation payments, the amendment made by
section 4706 shall not apply to such organization until
3 years after the date of the enactment of this Act.
(5) Sanctions for noncompliance.--Section 1932(e) of the
Social Security Act, as added by section 4707(a), shall apply to
contracts entered into or renewed on or after April 1, 1998.
(6) Limitation on ffp for enrollment brokers.--The amendment
made by section 4707(b) shall apply to amounts expended on or
after October 1, 1997.
(7) 6-month guaranteed eligibility.--The amendments made by
section 4709 shall take effect on October 1, 1997.
(c) Nonapplication to Waivers.--Nothing in this chapter (or the
amendments made by this chapter) shall be construed as affecting the
terms and conditions of any waiver, or the authority of the Secretary of
Health and Human Services with respect to any such waiver, under section
1115 or 1915 of the Social Security Act (42 U.S.C. 1315, 1396n).
CHAPTER 2--FLEXIBILITY IN PAYMENT OF PROVIDERS
SEC. 4711. FLEXIBILITY IN PAYMENT METHODS FOR HOSPITAL, NURSING
FACILITY, ICF/MR, AND HOME HEALTH SERVICES.
(a) Repeal of Boren Requirements.--Section 1902(a)(13) (42 U.S.C.
1396a(a)(13)) is amended--
(1) by striking all that precedes subparagraph (D) and
inserting the following:
``(13) provide--
``(A) for a public process for determination of
rates of payment under the plan for hospital services,
nursing facility services, and services of intermediate
care facilities for the mentally retarded under which--
``(i) proposed rates, the methodologies
underlying the establishment of such rates, and
justifications for the proposed rates are
published,
[[Page 111 STAT. 508]]
``(ii) providers, beneficiaries and their
representatives, and other concerned State
residents are given a reasonable opportunity for
review and comment on the proposed rates,
methodologies, and justifications,
``(iii) final rates, the methodologies
underlying the establishment of such rates, and
justifications for such final rates are published,
and
``(iv) in the case of hospitals, such rates
take into account (in a manner consistent with
section 1923) the situation of hospitals which
serve a disproportionate number of low-income
patients with special needs;'';
(2) by redesignating subparagraphs (D) and (E) as
subparagraphs (B) and (C), respectively;
(3) in subparagraph (B), as so redesignated, by adding
``and'' at the end;
(4) in subparagraph (C), as so redesignated, by striking
``and'' at the end; and
(5) by striking subparagraph (F).
(b) Study <<NOTE: 42 USC 1396a note.>> and Report.--
(1) Study.--The Secretary of Health and Human Services shall
study the effect on access to, and the quality of, services
provided to beneficiaries of the rate-setting methods used by
States pursuant to section 1902(a)(13)(A) of the Social Security
Act (42 U.S.C. 1396a(a)(13)(A)), as amended by subsection (a).
(2) Report.--Not later than 4 years after the date of the
enactment of this Act, the Secretary of Health and Human
Services shall submit a report to the appropriate committees of
Congress on the conclusions of the study conducted under
paragraph (1), together with any recommendations for legislation
as a result of such conclusions.
(c) Conforming Amendments.--
(1) Section 1905(o)(3) (42 U.S.C. 1396d(o)(3)) is amended by
striking ``amount described in section 1902(a)(13)(D)'' and
inserting ``amount determined in section 1902(a)(13)(B)''.
(2) Section 1923 (42 U.S.C. 1396r-4) is amended, in
subsections (a)(1) and (e)(1), by striking ``1902(a)(13)(A)''
each place it appears and inserting ``1902(a)(13)(A)(iv)''.
(d) Effective <<NOTE: 42 USC 1396a note.>> Date.--This section
shall take effect on the date of the enactment of this Act and the
amendments made by subsections (a) and (c) shall apply to payment for
items and services furnished on or after October 1, 1997.
SEC. 4712. PAYMENT FOR CENTER AND CLINIC SERVICES.
(a) Phase-Out of Payment Based on Reasonable Costs.--Section
1902(a)(13)(C) (42 U.S.C. 1396a(a)(13)(C)), as redesignated by section
4711(a)(2), is amended by inserting ``(or 95 percent for services
furnished during fiscal year 2000, 90 percent for services furnished
during fiscal year 2001, 85 percent for services furnished during fiscal
year 2002, or 70 percent for services furnished during fiscal year
2003)'' after ``100 percent''.
(b) Transitional Supplemental Payment for Services Furnished Under
Certain Managed Care Contracts.--
(1) In general.--Section 1902(a)(13)(C) (42 U.S.C.
1396a(a)(13)(C)), as so redesignated, is further amended--
(A) by inserting ``(i)'' after ``(C)'', and
(B) by inserting before the semicolon at the end the
following: ``and (ii) in carrying out clause (i) in the
case
[[Page 111 STAT. 509]]
of services furnished by a Federally-qualified health
center or a rural health clinic pursuant to a contract
between the center and an organization under section
1903(m), for payment to the center or clinic at least
quarterly by the State of a supplemental payment equal
to the amount (if any) by which the amount determined
under clause (i) exceeds the amount of the payments
provided under such contract''.
(2) Conforming amendment to managed care contract
requirement.--Clause (ix) of section 1903(m)(2)(A) (42 U.S.C.
1396b(m)(2)(A)) is amended to read as follows:
``(ix) such contract provides, in the case of an entity that
has entered into a contract for the provision of services with a
Federally-qualified health center or a rural health clinic, that
the entity shall provide payment that is not less than the level
and amount of payment which the entity would make for the
services if the services were furnished by a provider which is
not a Federally-qualified health center or a rural health
clinic;''.
(3) Effective <<NOTE: 42 USC 1396a note.>> date.--The
amendments made by this subsection shall apply to services
furnished on or after October 1, 1997.
(c) End of Transitional Payment Rules.--Effective for services
furnished on or after October 1, 2003--
(1) subparagraph (C) of section 1902(a)(13) (42 U.S.C.
1396a(a)(13)), as so redesignated, is repealed, and
(2) clause (ix) of section 1903(m)(2)(A) (42 U.S.C.
1396b(m)(2)(A)) is repealed.
(d) Flexibility in Coverage of Non-Freestanding Look-Alikes.--
(1) In general.--Section 1905(l)(2)(B)(iii) (42 U.S.C.
1396d(l)(2)(B)(iii)) is amended by inserting ``including
requirements of the Secretary that an entity may not be owned,
controlled, or operated by another entity,'' after ``such a
grant,''.
(2) Effective <<NOTE: 42 USC 1396a note.>> date.--The
amendment made by paragraph (1) shall apply to services
furnished on or after the date of the enactment of this Act.
SEC. 4713. ELIMINATION OF OBSTETRICAL AND PEDIATRIC PAYMENT RATE
REQUIREMENTS.
(a) In General.--Section 1926 (42 U.S.C. 1396r-7) is repealed.
(b) Effective <<NOTE: 42 USC 1396r-7 note.>> Date.--The repeal made
by subsection (a) shall apply to services furnished on or after October
1, 1997.
SEC. 4714. MEDICAID PAYMENT RATES FOR CERTAIN MEDICARE COST-SHARING.
(a) Clarification Regarding State Liability for Medicare Cost-
Sharing.--
(1) In general.--Section 1902(n) (42 U.S.C. 1396a(n)) is
amended--
(A) by inserting ``(1)'' after ``(n)'', and
(B) by adding at the end the following:
``(2) In carrying out paragraph (1), a State is not required to
provide any payment for any expenses incurred relating to payment for
deductibles, coinsurance, or copayments for medicare cost-sharing to the
extent that payment under title XVIII for the service would exceed the
payment amount that otherwise would be made
[[Page 111 STAT. 510]]
under the State plan under this title for such service if provided to an
eligible recipient other than a medicare beneficiary.
``(3) In the case in which a State's payment for medicare cost-
sharing for a qualified medicare beneficiary with respect to an item or
service is reduced or eliminated through the application of paragraph
(2)--
``(A) for purposes of applying any limitation under title
XVIII on the amount that the beneficiary may be billed or
charged for the service, the amount of payment made under title
XVIII plus the amount of payment (if any) under the State plan
shall be considered to be payment in full for the service;
``(B) the beneficiary shall not have any legal liability to
make payment to a provider or to an organization described in
section 1903(m)(1)(A) for the service; and
``(C) any lawful <<NOTE: Applicability.>> sanction that may
be imposed upon a provider or such an organization for excess
charges under this title or title XVIII shall apply to the
imposition of any charge imposed upon the individual in such
case.
This paragraph shall not be construed as preventing payment of any
medicare cost-sharing by a medicare supplemental policy or an employer
retiree health plan on behalf of an individual.''.
(2) Conforming clarification.--Section 1905(p)(3) (42 U.S.C.
1396d(p)(3)) is amended by inserting ``(subject to section
1902(n)(2))'' after ``means''.
(b) Limitation on Medicare Providers.--
(1) Provider agreements.--Section 1866(a)(1)(A) (42 U.S.C.
1395cc(a)(1)(A)) is amended--
(A) by inserting ``(i)'' after ``(A)'', and
(B) by inserting before the comma at the end the
following: ``, and (ii) not to impose any charge that is
prohibited under section 1902(n)(3)''.
(2) Nonparticipating providers.--Section 1848(g)(3)(A) (42
U.S.C. 1395w-4(g)(3)(A)) is amended by inserting before the
period at the end the following: ``and the provisions of section
1902(n)(3)(A) apply to further limit permissible charges under
this section''.
(c) Effective <<NOTE: 42 USC 1396a note.>> Date.--The amendments
made by this section shall apply to payment for (and with respect to
provider agreements with respect to) items and services furnished on or
after the date of the enactment of this Act. The amendments made by
subsection (a) shall also apply to payment by a State for items and
services furnished before such date if such payment is the subject of a
law suit that is based on the provisions of sections 1902(n) and 1905(p)
of the Social Security Act and that is pending as of, or is initiated
after, the date of the enactment of this Act.
SEC. 4715. TREATMENT OF VETERANS' PENSIONS UNDER MEDICAID.
(a) Post-Eligibility Treatment.--Section 1902(r)(1) (42 U.S.C.
1396a(r)(1)) is amended--
(1) by inserting ``(A)'' after ``(r)(1)'',
(2) by inserting ``, the treatment described in subparagraph
(B) shall apply,'' after ``under such a waiver'';
(3) by striking ``and,'' and inserting ``, and''; and
(4) by adding at the end the following:
``(B)(i) In the case of a veteran who does not have a spouse or a
child, if the veteran--
[[Page 111 STAT. 511]]
``(I) receives, after the veteran has been determined to be
eligible for medical assistance under the State plan under this
title, a veteran's pension in excess of $90 per month, and
``(II) resides in a State veterans home with respect to
which the Secretary of Veterans Affairs makes per diem payments
for nursing home care pursuant to section 1741(a) of title 38,
United States Code,
any such pension payment, including any payment made due to the need for
aid and attendance, or for unreimbursed medical expenses, that is in
excess of $90 per month shall be counted as income only for the purpose
of applying such excess payment to the State veterans home's cost of
providing nursing home care to the veteran.
``(ii) The provisions <<NOTE: Applicability.>> of clause (i) shall
apply with respect to a surviving spouse of a veteran who does not have
a child in the same manner as they apply to a veteran described in such
clause.''.
(b) Effective Date.--The <<NOTE: 42 USC 1396a note.>> amendments
made by this section shall apply on and after October 1, 1997.
CHAPTER 3--FEDERAL PAYMENTS TO STATES
SEC. 4721. REFORMING DISPROPORTIONATE SHARE PAYMENTS UNDER STATE
MEDICAID PROGRAMS.
(a) Adjustment of State DSH Allotments.--
(1) In general.--Section 1923(f) (42 U.S.C. 1396r-4(f)) is
amended to read as follows:
``(f) Limitation on Federal Financial Participation.--
``(1) In general.--Payment under section 1903(a) shall not
be made to a State with respect to any payment adjustment made
under this section for hospitals in a State for quarters in a
fiscal year in excess of the disproportionate share hospital (in
this subsection referred to as `DSH') allotment for the State
for the fiscal year, as specified in paragraphs (2) and (3).
``(2) State dsh allotments for fiscal years 1998 through
2002.--The DSH allotment for a State for each fiscal year during
the period beginning with fiscal year 1998 and ending with
fiscal year 2002 is determined in accordance with the following
table:
----------------------------------------------------------------------------------------------------------------
DSH Allotment (in millions of dollars)
State or District -------------------------------------------------
FY 98 FY 99 FY 00 FY 01 FY 02
----------------------------------------------------------------------------------------------------------------
Alabama 293 269 248 246 246
Alaska 10 10 10 9 9
Arizona 81 81 81 81 81
Arkansas 2 2 2 2 2
California 1,085 1,068 986 931 877
Colorado 93 85 79 74 74
Connecticut 200 194 164 160 160
Delaware 4 4 4 4 4
District of Columbia 23 23 23 23 23
Florida 207 203 197 188 160
Georgia 253 248 241 228 215
Hawaii 0 0 0 0 0
Idaho 1 1 1 1 1
Illinois 203 199 193 182 172
[[Page 111 STAT. 512]]
Indiana 201 197 191 181 171
Iowa 8 8 8 8 8
Kansas 51 49 42 36 33
Kentucky 137 134 130 123 116
Louisiana 880 795 713 658 631
Maine 103 99 84 84 84
Maryland 72 70 68 64 61
Massachusetts 288 282 273 259 244
Michigan 249 244 237 224 212
Minnesota 16 16 16 16 16
Mississippi 143 141 136 129 122
Missouri 436 423 379 379 379
Montana 0.2 0.2 0.2 0.2 0.2
Nebraska 5 5 5 5 5
Nevada 37 37 37 37 37
New Hampshire 140 136 130 130 130
New Jersey 600 582 515 515 515
New Mexico 5 5 5 5 5
New York 1,512 1,482 1,436 1,361 1,285
North Carolina 278 272 264 250 236
North Dakota 1 1 1 1 1
Ohio 382 374 363 344 325
Oklahoma 16 16 16 16 16
Oregon 20 20 20 20 20
Pennsylvania 529 518 502 476 449
Rhode Island 62 60 58 55 52
South Carolina 313 303 262 262 262
South Dakota 1 1 1 1 1
Tennessee 0 0 0 0 0
Texas 979 950 806 765 765
Utah 3 3 3 3 3
Vermont 18 18 18 18 18
Virginia 70 68 66 63 59
Washington 174 171 166 157 148
West Virginia 64 63 61 58 54
Wisconsin 7 7 7 7 7
Wyoming 0 0 0 0 0.
----------------------------------------------------------------------------------------------------------------
``(3) State dsh allotments for fiscal year 2003 and
thereafter.--
``(A) In general.--The DSH allotment for any State
for fiscal year 2003 and each succeeding fiscal year is
equal to the DSH allotment for the State for the
preceding fiscal year under paragraph (2) or this
paragraph, increased, subject to subparagraph (B), by
the percentage change in the consumer price index for
all urban consumers (all items; U.S. city average), for
the previous fiscal year.
``(B) Limitation.--The DSH allotment for a State
shall not be increased under subparagraph (A) for a
fiscal year to the extent that such an increase would
result in the DSH allotment for the year exceeding the
greater of--
``(i) the DSH allotment for the previous year,
or
``(ii) 12 percent of the total amount of
expenditures under the State plan for medical
assistance during the fiscal year.
``(4) Definition of state.-- In this subsection, the term
`State' means the 50 States and the District of Columbia.''.
(2) <<NOTE: 42 USC 1396r-4 note.>> Effective date.--The
amendment made by paragraph (1) shall apply to payment
adjustments attributable to DSH allotments for fiscal years
beginning with fiscal year 1998.
[[Page 111 STAT. 513]]
(b) Limitation on Payments to Institutions For Mental Diseases.--
Section 1923 of the Social Security Act (42 U.S.C. 1396r-4) is amended
by adding at the end the following:
``(h) Limitation on Certain State DSH Expenditures.--
``(1) In general.--Payment under section 1903(a) shall not
be made to a State with respect to any payment adjustments made
under this section for quarters in a fiscal year (beginning with
fiscal year 1998) to institutions for mental diseases or other
mental health facilities, to the extent the aggregate of such
adjustments in the fiscal year exceeds the lesser of the
following:
``(A) 1995 imd dsh payment adjustments.--The total
State DSH expenditures that are attributable to fiscal
year 1995 for payments to institutions for mental
diseases and other mental health facilities (based on
reporting data specified by the State on HCFA Form 64 as
mental health DSH, and as approved by the Secretary).
``(B) Applicable percentage of 1995 total dsh
payment allotment.--The amount of such payment
adjustments which are equal to the applicable percentage
of the Federal share of payment adjustments made to
hospitals in the State under subsection (c) that are
attributable to the 1995 DSH allotment for the State for
payments to institutions for mental diseases and other
mental health facilities (based on reporting data
specified by the State on HCFA Form 64 as mental health
DSH, and as approved by the Secretary).
``(2) Applicable percentage.--
``(A) In general.--For purposes of paragraph (1),
the applicable percentage with respect to--
``(i) each of fiscal years 1998, 1999, and
2000, is the percentage determined under
subparagraph (B); or
``(ii) a succeeding fiscal year is the lesser
of the percentage determined under subparagraph
(B) or the following percentage:
``(I) For fiscal year 2001, 50
percent.
``(II) For fiscal year 2002, 40
percent.
``(III) For each succeeding fiscal
year, 33 percent.
``(B) 1995 percentage.--The percentage determined
under this subparagraph is the ratio (determined as a
percentage) of--
``(i) the Federal share of payment adjustments
made to hospitals in the State under subsection
(c) that are attributable to the 1995 DSH
allotment for the State (as reported by the State
not later than January 1, 1997, on HCFA Form 64,
and as approved by the Secretary) for payments to
institutions for mental diseases and other mental
health facilities, to
``(ii) the State 1995 DSH spending amount.
``(C) State 1995 dsh spending amount.--For purposes
of subparagraph (B)(ii), the `State 1995 DSH spending
amount', with respect to a State, is the Federal medical
assistance percentage (for fiscal year 1995) of the
payment adjustments made under subsection (c) under the
State plan that are attributable to the fiscal year 1995
DSH
[[Page 111 STAT. 514]]
allotment for the State (as reported by the State not
later than January 1, 1997, on HCFA Form 64, and as
approved by the Secretary).''.
(c) Description of Targeting Payments.--Section 1923(a)(2) (42
U.S.C. 1396r-4(a)(2)) is amended by adding at the end the following:
``(D) A State plan under this title shall not be considered
to meet the requirements of section 1902(a)(13)(A)(iv) (insofar
as it requires payments to hospitals to take into account the
situation of hospitals that serve a disproportionate number of
low-income patients with special needs), as of October 1, 1998,
unless the State has submitted to the Secretary by such date a
description of the methodology used by the State to identify and
to make payments to disproportionate share hospitals, including
children's hospitals, on the basis of the proportion of low-
income and medicaid patients served by such hospitals.
The <<NOTE: Reports.>> State shall provide an annual report to
the Secretary describing the disproportionate share payments to
each such disproportionate share hospital.''.
(d) Direct Payment by State for Managed Care Enrollees.--Section
1923 (42 U.S.C. 1396r-4) is amended by adding at the end the following:
``(i) Requirement for Direct Payment.--
``(1) In general.--No payment may be made under section
1903(a)(1) with respect to a payment adjustment made under this
section, for services furnished by a hospital on or after
October 1, 1997, with respect to individuals eligible for
medical assistance under the State plan who are enrolled with a
managed care entity (as defined in section 1932(a)(1)(B)) or
under any other managed care arrangement unless a payment, equal
to the amount of the payment adjustment--
``(A) is made directly to the hospital by the State;
and
``(B) is not used to determine the amount of a
prepaid capitation payment under the State plan to the
entity or arrangement with respect to such individuals.
``(2) Exception for current arrangements.--Paragraph (1)
shall not apply to a payment adjustment provided pursuant to a
payment arrangement in effect on July 1, 1997.''.
(e) Transition <<NOTE: Effective date. California. 42 USC 1396r-4
note.>> Rule.--Effective July 1, 1997, section 1923(g)(2)(A) of the
Social Security Act (42 U.S.C. 1396r-4(g)(2)(A)) shall be applied to the
State of California as though--
(1) ``(or that begins on or after July 1, 1997, and before
July 1, 1999)'' were inserted in such section after ``January 1,
1995,''; and
(2) ``(or 175 percent in the case of a State fiscal year
that begins on or after July 1, 1997, and before July 1, 1999)''
were inserted in such section after ``200 percent''.
SEC. 4722. TREATMENT OF STATE TAXES IMPOSED ON CERTAIN HOSPITALS.
(a) Exception From Tax Does Not Disqualify as Broad-Based Tax.--
Section 1903(w)(3) (42 U.S.C. 1396b(w)(3)) is amended--
(1) in subparagraph (B), by striking ``and (E)'' and
inserting ``(E), and (F)''; and
(2) by adding at the end the following:
[[Page 111 STAT. 515]]
``(F) In no case shall a tax not qualify as a broad-based health
care related tax under this paragraph because it does not apply to a
hospital that is described in section 501(c)(3) of the Internal Revenue
Code of 1986 and exempt from taxation under section 501(a) of such Code
and that does not accept payment under the State plan under this title
or under title XVIII.''.
(b) Reduction in Federal Financial Participation in Case of
Imposition of Tax.--Section 1903(b) (42 U.S.C. 1396b(b)), as amended by
section 4707(b), is amended by adding at the end the following:
``(5) Notwithstanding the preceding provisions of this section, the
amount determined under subsection (a)(1) for any State shall be
decreased in a quarter by the amount of any health care related taxes
(described in section 1902(w)(3)(A)) that are imposed on a hospital
described in subsection (w)(3)(F) in that quarter.''.
(c) Waiver of Certain Provider Tax Provisions.--Notwithstanding any
other provision of law, taxes, fees, or assessments, as defined in
section 1903(w)(3)(A) of the Social Security Act (42 U.S.C.
1396b(w)(3)(A)), that were collected by the State of New York from a
health care provider before June 1, 1997, and for which a waiver of the
provisions of subparagraph (B) or (C) of section 1903(w)(3) of such Act
has been applied for, or that would, but for this subsection require
that such a waiver be applied for, in accordance with subparagraph (E)
of such section, and, (if so applied for) upon which action by the
Secretary of Health and Human Services (including any judicial review of
any such proceeding) has not been completed as of July 23, 1997, are
deemed to be permissible health care related taxes and in compliance
with the requirements of subparagraphs (B) and (C) of section 1903(w)(3)
of such Act.
(d) Effective <<NOTE: 42 USC 1396b note.>> Date.--The amendments
made by subsection (a) shall apply to taxes imposed before, on, or after
the date of the enactment of this Act and the amendment made by
subsection (b) shall apply to taxes imposed on or after such date.
SEC. 4723. ADDITIONAL <<NOTE: 8 USC 1611 note.>> FUNDING FOR STATE
EMERGENCY HEALTH SERVICES FURNISHED TO UNDOCUMENTED ALIENS.
(a) Total Amount Available for Allotment.--There are available for
allotments under this section for each of the 4 consecutive fiscal years
(beginning with fiscal year 1998) $25,000,000 for payments to certain
States under this section.
(b) State Allotment Amount.--
(1) In general.--The Secretary of Health and Human Services
shall compute an allotment for each fiscal year beginning with
fiscal year 1998 and ending with fiscal year 2001 for each of
the 12 States with the highest number of undocumented aliens.
The amount of such allotment for each such State for a fiscal
year shall bear the same ratio to the total amount available for
allotments under subsection (a) for the fiscal year as the ratio
of the number of undocumented aliens in the State in the fiscal
year bears to the total of such numbers for all such States for
such fiscal year. The amount of allotment to a State provided
under this paragraph for a fiscal year that is not paid out
under subsection (c) shall be available for payment during the
subsequent fiscal year.
(2) Determination.--For purposes of paragraph (1), the
number of undocumented aliens in a State under this section
[[Page 111 STAT. 516]]
shall be determined based on estimates of the resident illegal
alien population residing in each State prepared by the
Statistics Division of the Immigration and Naturalization
Service as of October 1992 (or as of such later date if such
date is at least 1 year before the beginning of the fiscal year
involved).
(c) Use of Funds.--From the allotments made under subsection (b),
the Secretary shall pay to each State amounts the State demonstrates
were paid by the State (or by a political subdivision of the State) for
emergency health services furnished to undocumented aliens.
(d) State Defined.--For purposes of this section, the term ``State''
includes the District of Columbia.
(e) State Entitlement.--This section constitutes budget authority in
advance of appropriations Acts and represents the obligation of the
Federal Government to provide for the payment to States of amounts
provided under this section.
SEC. 4724. ELIMINATION OF WASTE, FRAUD, AND ABUSE.
(a) Ban on Spending for Nonhealth Related Items.--Section 1903(i)
(42 U.S.C. 1396b(i)) is amended--
(1) in paragraphs (2) and (16), by striking the period at
the end and inserting ``; or'';
(2) in paragraphs (10)(B), (11), and (13), by adding ``or''
at the end; and
(3) by inserting after paragraph (16), the following:
``(17) with respect to any amount expended for roads,
bridges, stadiums, or any other item or service not covered
under a State plan under this title.''.
(b) Surety Bond Requirement for Home Health Agencies.--
(1) In general.--Section 1903(i) (42 U.S.C. 1396b(i)), as
amended by subsection (a), is amended--
(A) in paragraph (17), by striking the period at the
end and inserting ``; or''; and
(B) by inserting after paragraph (17), the
following:
``(18) with respect to any amount expended for home health
care services provided by an agency or organization unless the
agency or organization provides the State agency on a continuing
basis a surety bond in a form specified by the Secretary under
paragraph (7) of section 1861(o) and in an amount that is not
less than $50,000 or such comparable surety bond as the
Secretary may permit under the last sentence of such section.''.
(2) Effective <<NOTE: 42 USC 1396b note.>> date.--The
amendments made by paragraph (1) shall apply to home health care
services furnished on or after January 1, 1998.
(c) Conflict of Interest Safeguards.--
(1) In general.--Section 1902(a)(4)(C) (42 U.S.C.
1396a(a)(4)(C)) is amended--
(A) by striking ``and (C)'' and inserting ``(C)'';
(B) by striking ``local officer or employee'' and
inserting ``local officer, employee, or independent
contractor'';
(C) by striking ``such an officer or employee'' the
first 2 places it appears and inserting ``such an
officer, employee, or contractor''; and
[[Page 111 STAT. 517]]
(D) by inserting before the semicolon the following:
``, and (D) that each State or local officer, employee,
or independent contractor who is responsible for
selecting, awarding, or otherwise obtaining items and
services under the State plan shall be subject to
safeguards against conflicts of interest that are at
least as stringent as the safeguards that apply under
section 27 of the Office of Federal Procurement Policy
Act (41 U.S.C. 423) to persons described in subsection
(a)(2) of such section of that Act''.
(2) Effective <<NOTE: 42 USC 1396a note.>> date.--The
amendments made by paragraph (1) shall take effect on January 1,
1998.
(d) Authority To Refuse To Enter Into Medicaid Agreements With
Individuals or Entities Convicted of Felonies.--Section 1902(a)(23) (42
U.S.C. 1396(a)) is amended--
(1) by striking ``except as provided in subsection (g) and
in section 1915 and except in the case of Puerto Rico, the
Virgin Islands, and Guam,''; and
(2) by inserting before the semicolon at the end the
following: ``, except as provided in subsection (g) and in
section 1915, except that this paragraph shall not apply in the
case of Puerto Rico, the Virgin Islands, and Guam, and except
that nothing in this paragraph shall be construed as requiring a
State to provide medical assistance for such services furnished
by a person or entity convicted of a felony under Federal or
State law for an offense which the State agency determines is
inconsistent with the best interests of beneficiaries under the
State plan''.
(e) Monitoring <<NOTE: 42 USC 1396a note.>> Payments for Dual
Eligibles.--The Administrator of the Health Care Financing
Administration shall develop mechanisms to improve the monitoring of,
and to prevent, inappropriate payments under the medicaid program under
title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) in the
case of individuals who are dually eligible for benefits under such
program and under the medicare program under title XVIII of such Act (42
U.S.C. 1395 et seq.).
(f) Beneficiary and Program Protection Against Waste, Fraud, and
Abuse.--Section 1902(a) (42 U.S.C. 1396a(a)) is amended--
(1) by striking ``and'' at the end of paragraph (62);
(2) by striking the period at the end of paragraph (63) and
inserting ``; and''; and
(3) by inserting after paragraph (63) the following:
``(64) provide, not later than 1 year after the date of the
enactment of this paragraph, a mechanism to receive reports from
beneficiaries and others and compile data concerning alleged
instances of waste, fraud, and abuse relating to the operation
of this title;''.
(g) Disclosure of Information and Surety Bond Requirement for
Suppliers of Durable Medical Equipment.--
(1) Requirement.--Section 1902(a) (42 U.S.C. 1396a(a)), as
amended by subsection (f), is amended--
(A) by striking ``and'' at the end of paragraph
(63);
(B) by striking the period at the end of paragraph
(64) and inserting ``; and''; and
(C) by inserting after paragraph (64) the following:
``(65) provide that the State shall issue provider numbers
for all suppliers of medical assistance consisting of durable
[[Page 111 STAT. 518]]
medical equipment, as defined in section 1861(n), and the State
shall not issue or renew such a supplier number for any such
supplier unless--
``(A)(i) full and complete information as to the
identity of each person with an ownership or control
interest (as defined in section 1124(a)(3)) in the
supplier or in any subcontractor (as defined by the
Secretary in regulations) in which the supplier directly
or indirectly has a 5 percent or more ownership
interest; and
``(ii) to the extent determined to be feasible under
regulations of the Secretary, the name of any disclosing
entity (as defined in section 1124(a)(2)) with respect
to which a person with such an ownership or control
interest in the supplier is a person with such an
ownership or control interest in the disclosing entity;
and
``(B) a surety bond in a form specified by the
Secretary under section 1834(a)(16)(B) and in an amount
that is not less than $50,000 or such comparable surety
bond as the Secretary may permit under the second
sentence of such section.''.
(2) Effective <<NOTE: 42 USC 1396a note.>> date.--The
amendments made by paragraph (1) shall apply to suppliers of
medical assistance consisting of durable medical equipment
furnished on or after January 1, 1998.
SEC. 4725. INCREASED FMAPS.
(a) Alaska.--Notwithstanding <<NOTE: 42 USC 1396d note.>> the first
sentence of section 1905(b) of the Social Security Act (42 U.S.C.
1396d(b)), the Federal medical assistance percentage determined under
such sentence for Alaska shall be 59.8 percent but only with respect
to--
(1) items and services furnished under a State plan under
title XIX or under a State child health plan under title XXI of
such Act during fiscal years 1998, 1999, and 2000;
(2) payments made on a capitation or other risk-basis under
such titles for coverage occurring during such period; and
(3) payments under title XIX of such Act attributable to DSH
allotments for such State determined under section 1923(f) of
such Act (42 U.S.C. 1396r-4(f)) for such fiscal years.
(b) District of Columbia.--
(1) In general.--The first sentence of section 1905(b) (42
U.S.C. 1396d(b)) is amended--
(A) by striking ``and (2)'' and inserting ``, (2)'',
and
(B) by inserting before the period at the end the
following: ``, and (3) for purposes of this title and
title XXI, the Federal medical assistance percentage for
the District of Columbia shall be 70 percent''.
(2) Effective <<NOTE: 42 USC 1396d note.>> date.--The
amendments made by paragraph (1) shall apply to--
(A) items and services furnished on or after October
1, 1997;
(B) payments made on a capitation or other risk-
basis for coverage occurring on or after such date; and
(C) payments attributable to DSH allotments for such
States determined under section 1923(f) of such Act (42
U.S.C. 1396r-4(f)) for fiscal years beginning with
fiscal year 1998.
[[Page 111 STAT. 519]]
SEC. 4726. INCREASE IN PAYMENT LIMITATION FOR TERRITORIES.
Section 1108 (42 U.S.C. 1308) is amended--
(1) in subsection (f), by striking ``The'' and inserting
``Subject to subsection (g), the''; and
(2) by adding at the end the following:
``(g) Medicaid Payments to Territories for Fiscal Year 1998 and
Thereafter.--
``(1) Fiscal year 1998.--With respect to fiscal year 1998,
the amounts otherwise determined for Puerto Rico, the Virgin
Islands, Guam, the Northern Mariana Islands, and American Samoa
under subsection (f) for such fiscal year shall be increased by
the following amounts:
``(A) For Puerto Rico, $30,000,000.
``(B) For the Virgin Islands, $750,000.
``(C) For Guam, $750,000.
``(D) For the Northern Mariana Islands, $500,000.
``(E) For American Samoa, $500,000.
``(2) Fiscal year 1999 and thereafter.--Notwithstanding
subsection (f), with respect to fiscal year 1999 and any fiscal
year thereafter, the total amount certified by the Secretary
under title XIX for payment to--
``(A) Puerto Rico shall not exceed the sum of the
amount provided in this subsection for the preceding
fiscal year increased by the percentage increase in the
medical care component of the Consumer Price Index for
all urban consumers (as published by the Bureau of Labor
Statistics) for the 12-month period ending in March
preceding the beginning of the fiscal year, rounded to
the nearest $100,000;
``(B) the Virgin Islands shall not exceed the sum of
the amount provided in this subsection for the preceding
fiscal year increased by the percentage increase
referred to in subparagraph (A), rounded to the nearest
$10,000;
``(C) Guam shall not exceed the sum of the amount
provided in this subsection for the preceding fiscal
year increased by the percentage increase referred to in
subparagraph (A), rounded to the nearest $10,000;
``(D) the Northern Mariana Islands shall not exceed
the sum of the amount provided in this subsection for
the preceding fiscal year increased by the percentage
increase referred to in subparagraph (A), rounded to the
nearest $10,000; and
``(E) American Samoa shall not exceed the sum of the
amount provided in this subsection for the preceding
fiscal year increased by the percentage increase
referred to in subparagraph (A), rounded to the nearest
$10,000.''.
CHAPTER 4--ELIGIBILITY
SEC. 4731. STATE OPTION OF CONTINUOUS ELIGIBILITY FOR 12 MONTHS;
CLARIFICATION OF STATE OPTION TO COVER CHILDREN.
(a) Continuous Eligibility Option.--Section 1902(e) (42 U.S.C.
1396a(e)) is amended by adding at the end the following new paragraph:
``(12) At the option of the State, the plan may provide that an
individual who is under an age specified by the State (not
[[Page 111 STAT. 520]]
to exceed 19 years of age) and who is determined to be eligible for
benefits under a State plan approved under this title under subsection
(a)(10)(A) shall remain eligible for those benefits until the earlier
of--
``(A) the end of a period (not to exceed 12 months)
following the determination; or
``(B) the time that the individual exceeds that age.''.
(b) Clarification of State Option To Cover All Children Under 19
Years of Age.--Section 1902(l)(1)(D) (42 U.S.C. 1396a(l)(1)(D)) is
amended by inserting ``(or, at the option of a State, after any earlier
date)'' after ``children born after September 30, 1983''.
(c) Effective Date.--The amendments made by this section shall apply
to medical assistance for items and services furnished on or after
October 1, 1997.
SEC. 4732. PAYMENT OF PART B PREMIUMS.
(a) Eligibility.--Section 1902(a)(10)(E) (42 U.S.C. 1396a(a)(10)(E))
is amended--
(1) by striking ``and'' at the end of clause (ii); and
(2) by inserting after clause (iii) the following:
``(iv) subject to sections 1933 and 1905(p)(4), for
making medical assistance available (but only for
premiums payable with respect to months during the
period beginning with January 1998, and ending with
December 2002)--
``(I) for medicare cost-sharing described in
section 1905(p)(3)(A)(ii) for individuals who
would be qualified medicare beneficiaries
described in section 1905(p)(1) but for the fact
that their income exceeds the income level
established by the State under section 1905(p)(2)
and is at least 120 percent, but less than 135
percent, of the official poverty line (referred to
in such section) for a family of the size involved
and who are not otherwise eligible for medical
assistance under the State plan, and
``(II) for the portion of medicare cost-
sharing described in section 1905(p)(3)(A)(ii)
that is attributable to the operation of the
amendments made by (and subsection (e)(3) of)
section 4611 of the Balanced Budget Act of 1997
for individuals who would be described in
subclause (I) if `135 percent' and `175 percent'
were substituted for `120 percent' and `135
percent' respectively; and''.
(b) Conforming Amendment.--Section 1905(b) (42 U.S.C. 1396d(b)) is
amended by striking ``The term'' and inserting ``Subject to section
1933(d), the term''.
(c) Terms and Conditions of Coverage.--Title XIX (42 U.S.C. 1395 et
seq.), as amended by section 4701(a), is amended by redesignating
section 1933 as section 1934 <<NOTE: 42 USC 1396v.>> and by inserting
after section 1932 the following new section:
``state coverage of <<NOTE: 42 usc 1396u-3.>> medicare cost-sharing for
additional low-income medicare beneficiaries
``Sec. 1933. (a) In General.--A State plan under this title shall
provide, under section 1902(a)(10)(E)(iv) and subject to the succeeding
provisions of this section and through a plan amendment, for medical
assistance for payment of the cost of medicare
[[Page 111 STAT. 521]]
cost-sharing described in such section on behalf of all individuals
described in such section (in this section referred to as `qualifying
individuals') who are selected to receive such assistance under
subsection (b).
``(b) Selection of Qualifying Individuals.--A State shall select
qualifying individuals, and provide such individuals with assistance,
under this section consistent with the following:
``(1) All qualifying individuals may apply.--The State shall
permit all qualifying individuals to apply for assistance during
a calendar year.
``(2) Selection on first-come, first-served basis.--
``(A) In general.--For each calendar year (beginning
with 1998), from (and to the extent of) the amount of
the allocation under subsection (c) for the State for
the fiscal year ending in such calendar year, the State
shall select qualifying individuals who apply for the
assistance in the order in which they apply.
``(B) Carryover.--For calendar years after 1998, the
State shall give preference to individuals who were
provided such assistance (or other assistance described
in section 1902(a)(10)(E)) in the last month of the
previous year and who continue to be (or become)
qualifying individuals.
``(3) Limit on number of individuals based on allocation.--
The State shall limit the number of qualifying individuals
selected with respect to assistance in a calendar year so that
the aggregate amount of such assistance provided to such
individuals in such year is estimated to be equal to (but not
exceed) the State's allocation under subsection (c) for the
fiscal year ending in such calendar year.
``(4) Receipt of assistance during duration of year.--If a
qualifying individual is selected to receive assistance under
this section for a month in year, the individual is entitled to
receive such assistance for the remainder of the year if the
individual continues to be a qualifying individual. The fact
that an individual is selected to receive assistance under this
section at any time during a year does not entitle the
individual to continued assistance for any succeeding year.
``(c) Allocation.--
``(1) Total allocation.--The total amount available for
allocation under this section for--
``(A) fiscal year 1998 is $200,000,000;
``(B) fiscal year 1999 is $250,000,000;
``(C) fiscal year 2000 is $300,000,000;
``(D) fiscal year 2001 is $350,000,000; and
``(E) fiscal year 2002 is $400,000,000.
``(2) Allocation to states.--The Secretary shall provide for
the allocation of the total amount described in paragraph (1)
for a fiscal year, among the States that executed a plan
amendment in accordance with subsection (a), based upon the
Secretary's estimate of the ratio of--
``(A) an amount equal to the sum of--
``(i) twice the total number of individuals
described in section 1902(a)(10)(E)(iv)(I) in the
State, and
``(ii) the total number of individuals
described in section 1902(a)(10)(E)(iv)(II) in the
State; to
``(B) the sum of the amounts computed under
subparagraph (A) for all eligible States.
[[Page 111 STAT. 522]]
``(d) Applicable FMAP.--With respect to assistance described in
section 1902(a)(10)(E)(iv) furnished in a State for calendar quarters in
a calendar year --
``(1) to the extent that such assistance does not exceed the
State's allocation under subsection (c) for the fiscal year
ending in the calendar year, the Federal medical assistance
percentage shall be equal to 100 percent; and
``(2) to the extent that such assistance exceeds such
allocation, the Federal medical assistance percentage is 0
percent.
``(e) Limitation on Entitlement.--Except as specifically provided
under this section, nothing in this title shall be construed as
establishing any entitlement of individuals described in section
1902(a)(10)(E)(iv) to assistance described in such section.
``(f) Coverage of Costs Through Part B of the Medicare Program.--For
each fiscal year, the Secretary shall provide for the transfer from the
Federal Supplementary Medical Insurance Trust Fund under section 1841 to
the appropriate account in the Treasury that provides for payments under
section 1903(a) with respect to medical assistance provided under this
section, of an amount equivalent to the total of the amount of payments
made under such section that is attributable to this section and such
transfer shall be treated as an expenditure from such Trust Fund for
purposes of section 1839.''.
SEC. 4733. STATE OPTION TO PERMIT WORKERS WITH DISABILITIES TO BUY INTO
MEDICAID.
Section 1902(a)(10)(A)(ii) (42 U.S.C. 1396a(a)(10)(A)(ii)) is
amended--
(1) in subclause (XI), by striking ``or'' at the end;
(2) in subclause (XII), by adding ``or'' at the end; and
(3) by adding at the end the following:
``(XIII) who are in families whose
income is less than 250 percent of the
income official poverty line (as defined
by the Office of Management and Budget,
and revised annually in accordance with
section 673(2) of the Omnibus Budget
Reconciliation Act of 1981) applicable
to a family of the size involved, and
who but for earnings in excess of the
limit established under section
1905(q)(2)(B), would be considered to be
receiving supplemental security income
(subject, notwithstanding section 1916,
to payment of premiums or other cost-
sharing charges (set on a sliding scale
based on income) that the State may
determine);''.
SEC. 4734. PENALTY FOR FRAUDULENT ELIGIBILITY.
Section 1128B(a) (42 U.S.C. 1320a-7b(a)), as amended by section 217
of the Health Insurance Portability and Accountability Act of 1996
(Public Law 104-191; 110 Stat. 2008), is amended--
(1) by striking paragraph (6) and inserting the following:
``(6) for a fee knowingly and willfully counsels or assists
an individual to dispose of assets (including by any transfer in
trust) in order for the individual to become eligible for
medical assistance under a State plan under title XIX, if
disposing of the assets results in the imposition of a period of
ineligibility for such assistance under section 1917(c),''; and
(2) in clause (ii) of the matter following such paragraph,
by striking ``failure, or conversion by any other person'' and
[[Page 111 STAT. 523]]
inserting ``failure, conversion, or provision of counsel or
assistance by any other person''.
SEC. 4735. TREATMENT OF CERTAIN SETTLEMENT PAYMENTS.
(a) In General.--Notwithstanding any other provision of law, the
payments described in subsection (b) shall not be considered income or
resources in determining eligibility for, or the amount of benefits
under, a State plan of medical assistance approved under title XIX of
the Social Security Act.
(b) Payments Described.--The payments described in this subsection
are--
(1) payments made from any fund established pursuant to a
class settlement in the case of Susan Walker v. Bayer
Corporation, et al., 96-C-5024 (N.D. Ill.); and
(2) payments made pursuant to a release of all claims in a
case--
(A) that is entered into in lieu of the class
settlement referred to in paragraph (1); and
(B) that is signed by all affected parties in such
case on or before the later of--
(i) December 31, 1997, or
(ii) the date that is 270 days after the date
on which such release is first sent to the persons
(or the legal representative of such persons) to
whom the payment is to be made.
CHAPTER 5--BENEFITS
SEC. 4741. ELIMINATION OF REQUIREMENT TO PAY FOR PRIVATE INSURANCE.
(a) Repeal of State Plan Provision.--Section 1902(a)(25) (42 U.S.C.
1396a(a)(25)) is amended--
(1) by striking subparagraph (G); and
(2) by redesignating subparagraphs (H) and (I) as
subparagraphs (G) and (H), respectively.
(b) Making Provision Optional.--Section 1906 (42 U.S.C. 1396e) is
amended--
(1) in subsection (a)--
(A) by striking ``For purposes of section
1902(a)(25)(G) and subject to subsection (d), each'' and
inserting ``Each'';
(B) in paragraph (1), by striking ``shall'' and
inserting ``may''; and
(C) in paragraph (2), by striking ``shall'' and
inserting ``may''; and
(2) by striking subsection (d).
(c) Effective <<NOTE: 42 USC 1396a note.>> Date.--The amendments
made by this section shall take effect on the date of the enactment of
this Act.
SEC. 4742. PHYSICIAN QUALIFICATION REQUIREMENTS.
(a) In General.--Section 1903(i) (42 U.S.C. 1396b(i)) is amended by
striking paragraph (12).
(b) Effective <<NOTE: 42 USC 1396a note.>> Date.--The amendment
made by subsection (a) shall apply to services furnished on or after the
date of the enactment of this Act.
[[Page 111 STAT. 524]]
SEC. 4743. ELIMINATION OF REQUIREMENT OF PRIOR INSTITUTIONALIZATION WITH
RESPECT TO HABILITATION SERVICES FURNISHED UNDER A WAIVER
FOR HOME OR COMMUNITY-BASED SERVICES.
(a) In General.--Section 1915(c)(5) (42 U.S.C. 1396n(c)(5)) is
amended, in the matter preceding subparagraph (A), by striking ``, with
respect to individuals who receive such services after discharge from a
nursing facility or intermediate care facility for the mentally
retarded''.
(b) Effective <<NOTE: 42 USC 1396n note.>> Date.--The amendment
made by subsection (a) apply to services furnished on or after October
1, 1997.
SEC. 4744. STUDY AND <<NOTE: 42 USC 1396d note.>> REPORT ON EPSDT
BENEFIT.
(a) Study.--
(1) In general.--The Secretary of Health and Human Services,
in consultation with Governors, directors of State medicaid
programs, the American Academy of Actuaries, and representatives
of appropriate provider and beneficiary organizations, shall
conduct a study of the provision of early and periodic
screening, diagnostic, and treatment services under the medicaid
program under title XIX of the Social Security Act in accordance
with the requirements of section 1905(r) of such Act (42 U.S.C.
1396d(r)).
(2) Required contents.--The study conducted under paragraph
(1) shall include examination of the actuarial value of the
provision of such services under the medicaid program and an
examination of the portions of such actuarial value that are
attributable to paragraph (5) of section 1905(r) of such Act and
to the second sentence of such section.
(b) Report.--Not later than 12 months after the date of the
enactment of this Act, the Secretary of Health and Human Services shall
submit a report to Congress on the results of the study conducted under
subsection (a).
CHAPTER 6--ADMINISTRATION AND MISCELLANEOUS
SEC. 4751. ELIMINATION OF DUPLICATIVE INSPECTION OF CARE REQUIREMENTS
FOR ICFS/MR AND MENTAL HOSPITALS.
(a) Mental Hospitals.--Section 1902(a)(26) (42 U.S.C. 1396a(a)(26))
is amended--
(1) by striking ``provide--
``(A) with respect to each patient'' and inserting
``provide, with respect to each patient''; and
(2) by striking subparagraphs (B) and (C).
(b) ICFS/MR.--Section 1902(a)(31) (42 U.S.C. 1396a(a)(31)) is
amended--
(1) by striking ``provide--
``(A) with respect to each patient'' and inserting
``provide, with respect to each patient''; and
(2) by striking subparagraphs (B) and (C).
(c) Effective <<NOTE: 42 USC 1396a note.>> Date.--The amendments
made by this section take effect on the date of the enactment of this
Act.
SEC. 4752. ALTERNATIVE SANCTIONS FOR NONCOMPLIANT ICFS/MR.
(a) In General.--Section 1902(i)(1)(B) (42 U.S.C. 1396a(i)(1)(B)) is
amended by striking ``provide'' and inserting ``establish alternative
remedies if the State demonstrates to the
[[Page 111 STAT. 525]]
Secretary's satisfaction that the alternative remedies are effective in
deterring noncompliance and correcting deficiencies, and may provide''.
(b) Effective <<NOTE: 42 USC 1396a note.>> Date.--The amendment
made by subsection (a) takes effect on the date of the enactment of this
Act.
SEC. 4753. MODIFICATION OF MMIS REQUIREMENTS.
(a) In General.--Section 1903(r) (42 U.S.C. 1396b(r)) is amended--
(1) by striking all that precedes paragraph (5) and
inserting the following:
``(r)(1) In order to receive payments under subsection (a) for use
of automated data systems in administration of the State plan under this
title, a State must have in operation mechanized claims processing and
information retrieval systems that meet the requirements of this
subsection and that the Secretary has found--
``(A) are adequate to provide efficient, economical, and
effective administration of such State plan;
``(B) are compatible with the claims processing and
information retrieval systems used in the administration of
title XVIII, and for this purpose--
``(i) have a uniform identification coding
system for providers, other payees, and
beneficiaries under this title or title XVIII;
``(ii) provide liaison between States and
carriers and intermediaries with agreements under
title XVIII to facilitate timely exchange of
appropriate data; and
``(iii) provide for exchange of data between
the States and the Secretary with respect to
persons sanctioned under this title or title
XVIII;
``(C) are capable of providing accurate and timely data;
``(D) are complying with the applicable provisions of part C
of title XI;
``(E) are designed to receive provider claims in standard
formats to the extent specified by the Secretary; and
``(F) effective for claims filed on or after January 1,
1999, provide for electronic transmission of claims data in the
format specified by the Secretary and consistent with the
Medicaid Statistical Information System (MSIS) (including
detailed individual enrollee encounter data and other
information that the Secretary may find necessary).'';
(2) in paragraph (5)--
(A) by striking subparagraph (B);
(B) by striking all that precedes clause (i) and
inserting the following:
``(2) In order to meet the requirements of this paragraph,
mechanized claims processing and information retrieval systems must meet
the following requirements:'';
(C) in clause (iii), by striking ``under paragraph
(6)''; and
(D) by redesignating clauses (i) through (iii) as
paragraphs (A) through (C); and
(3) by striking paragraphs (6), (7), and (8).
(b) Conforming Amendments.--Section 1902(a)(25)(A)(ii) (42 U.S.C.
1396a(a)(25)(A)(ii)) is amended by striking all that follows ``shall''
and inserting the following: ``be integrated with, and be
[[Page 111 STAT. 526]]
monitored as a part of the Secretary's review of, the State's mechanized
claims processing and information retrieval systems required under
section 1903(r);''.
(c) Effective <<NOTE: 42 USC 1396a note.>> Date.--Except as
otherwise specifically provided, the amendments made by this section
shall take effect on January 1, 1998.
SEC. 4754. FACILITATING IMPOSITION OF STATE ALTERNATIVE REMEDIES ON
NONCOMPLIANT NURSING FACILITIES.
(a) In General.--Section 1919(h)(3)(D) (42 U.S.C. 1396r(h)(3)(D)) is
amended--
(1) by inserting ``and'' at the end of clause (i);
(2) by striking ``, and'' at the end of clause (ii) and
inserting a period; and
(3) by striking clause (iii).
(b) Effective <<NOTE: 42 USC 1396r note.>> Date.--The amendments
made by subsection (a) take effect on the date of the enactment of this
Act.
SEC. 4755. REMOVAL OF NAME FROM NURSE AIDE REGISTRY.
(a) Medicare.--Section 1819(g)(1) (42 U.S.C. 1395i-3(g)(1)) is
amended--
(1) by redesignating subparagraph (D) as subparagraph (E),
and
(2) by inserting after subparagraph (C) the following:
``(D) Removal of name from nurse aide registry.--
``(i) In <<NOTE: Procedures.>> general.--In
the case of a finding of neglect under
subparagraph (C), the State shall establish a
procedure to permit a nurse aide to petition the
State to have his or her name removed from the
registry upon a determination by the State that--
``(I) the employment and personal
history of the nurse aide does not
reflect a pattern of abusive behavior or
neglect; and
``(II) the neglect involved in the
original finding was a singular
occurrence.
``(ii) Timing of determination.--In no case
shall a determination on a petition submitted
under clause (i) be made prior to the expiration
of the 1-year period beginning on the date on
which the name of the petitioner was added to the
registry under subparagraph (C).''.
(b) Medicaid.--Section 1919(g)(1) (42 U.S.C. 1396r(g)(1)) is
amended--
(1) by redesignating subparagraph (D) as subparagraph (E),
and
(2) by inserting after subparagraph (C) the following:
``(D) Removal of name from nurse aide registry.--
``(i) In <<NOTE: Procedures.>> general.--In
the case of a finding of neglect under
subparagraph (C), the State shall establish a
procedure to permit a nurse aide to petition the
State to have his or her name removed from the
registry upon a determination by the State that--
``(I) the employment and personal
history of the nurse aide does not
reflect a pattern of abusive behavior or
neglect; and
``(II) the neglect involved in the
original finding was a singular
occurrence.
[[Page 111 STAT. 527]]
``(ii) Timing of determination.--In no case
shall a determination on a petition submitted
under clause (i) be made prior to the expiration
of the 1-year period beginning on the date on
which the name of the petitioner was added to the
registry under subparagraph (C).''.
(c) Retroactive <<NOTE: 42 USC 1395i-3 note.>> Review.--The
procedures developed by a State under the amendments made by subsection
(a) and (b) shall permit an individual to petition for a review of any
finding made by a State under section 1819(g)(1)(C) or 1919(g)(1)(C) of
the Social Security Act (42 U.S.C. 1395i-3(g)(1)(C) or 1396r(g)(1)(C))
after January 1, 1995.
SEC. 4756. MEDICALLY ACCEPTED INDICATION.
Section 1927(g)(1)(B)(i) (42 U.S.C. 1396r-8(g)(1)(B)(i)) is
amended--
(1) by striking ``and'' at the end of subclause (II),
(2) by redesignating subclause (III) as subclause (IV), and
(3) by inserting after subclause (II) the following:
``(III) the DRUGDEX Information
System; and''.
SEC. 4757. CONTINUATION OF STATE-WIDE SECTION 1115 MEDICAID WAIVERS.
(a) In General.--Section 1115 (42 U.S.C. 1315) is amended by adding
at the end the following new subsection:
``(e)(1) The provisions <<NOTE: Applicability.>> of this subsection
shall apply to the extension of any State-wide comprehensive
demonstration project (in this subsection referred to as `waiver
project') for which a waiver of compliance with requirements of title
XIX is granted under subsection (a).
``(2) During the 6-month period ending 1 year before the date the
waiver under subsection (a) with respect to a waiver project would
otherwise expire, the chief executive officer of the State which is
operating the project may submit to the Secretary a written request for
an extension, of up to 3 years, of the project.
``(3) If the Secretary fails to respond to the request within 6
months after the date it is submitted, the request is deemed to have
been granted.
``(4) If such a request is granted, the deadline for submittal of a
final report under the waiver project is deemed to have been extended
until the date that is 1 year after the date the waiver project would
otherwise have expired.
``(5) The <<NOTE: Evaluation.>> Secretary shall release an
evaluation of each such project not later than 1 year after the date of
receipt of the final report.
``(6) Subject to paragraphs (4) and (7), the extension of a waiver
project under this subsection shall be on the same terms and conditions
(including applicable terms and conditions relating to quality and
access of services, budget neutrality, data and reporting requirements,
and special population protections) that applied to the project before
its extension under this subsection.
``(7) If an original condition of approval of a waiver project was
that Federal expenditures under the project not exceed the Federal
expenditures that would otherwise have been made, the Secretary shall
take such steps as may be necessary to ensure that, in the extension of
the project under this subsection, such condition continues to be met.
In applying the previous sentence,
[[Page 111 STAT. 528]]
the Secretary shall take into account the Secretary's best estimate of
rates of change in expenditures at the time of the extension.''.
(b) Effective <<NOTE: 42 USC 1315 note.>> Date.--The amendment made
by subsection (a) shall apply to demonstration projects initially
approved before, on, or after the date of the enactment of this Act.
SEC. 4758. EXTENSION OF MORATORIUM.
Section 6408(a)(3) of the Omnibus Budget Reconciliation Act of 1989,
as amended by section 13642 of the Omnibus Budget Reconciliation Act of
1993, <<NOTE: 103 Stat. 2267.>> is amended by striking ``December 31,
1995'' and inserting ``December 31, 2002''.
SEC. 4759. EXTENSION <<NOTE: 42 USC 1396a note.>> OF EFFECTIVE DATE FOR
STATE LAW AMENDMENT.
In the case of a State plan under title XIX of the Social Security
Act which the Secretary of Health and Human Services determines requires
State legislation in order for the plan to meet the additional
requirements imposed by the amendments made by a provision of this
subtitle, the State plan shall not be regarded as failing to comply with
the requirements of such title solely on the basis of its failure to
meet these additional requirements before the first day of the first
calendar quarter beginning after the close of the first regular session
of the State legislature that begins after the date of the enactment of
this Act. For purposes of the previous sentence, in the case of a State
that has a 2-year legislative session, each year of the session is
considered to be a separate regular session of the State legislature.
Subtitle I--Programs of All-Inclusive Care for the Elderly (PACE)
SEC. 4801. COVERAGE OF PACE UNDER THE MEDICARE PROGRAM.
Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) is
amended by adding at the end the following new section:
``payments to, <<NOTE: 42 usc 1395eee.>> and coverage of benefits
under, programs of all-inclusive care for the elderly (pace)
``Sec. 1894. (a) Receipt of Benefits Through Enrollment in PACE
Program; Definitions for PACE Program Related Terms.--
``(1) Benefits through enrollment in a pace program.--In
accordance with this section, in the case of an individual who
is entitled to benefits under part A or enrolled under part B
and who is a PACE program eligible individual (as defined in
paragraph (5)) with respect to a PACE program offered by a PACE
provider under a PACE program agreement--
``(A) the individual may enroll in the program under
this section; and
``(B) so long as the individual is so enrolled and
in accordance with regulations--
``(i) the individual shall receive benefits
under this title solely through such program; and
``(ii) the PACE provider is entitled to
payment under and in accordance with this section
and such agreement for provision of such benefits.
[[Page 111 STAT. 529]]
``(2) PACE program defined.--For purposes of this section,
the term `PACE program' means a program of all-inclusive care
for the elderly that meets the following requirements:
``(A) Operation.--The entity operating the program
is a PACE provider (as defined in paragraph (3)).
``(B) Comprehensive benefits.--The program provides
comprehensive health care services to PACE program
eligible individuals in accordance with the PACE program
agreement and regulations under this section.
``(C) Transition.--In the case of an individual who
is enrolled under the program under this section and
whose enrollment ceases for any reason (including that
the individual no longer qualifies as a PACE program
eligible individual, the termination of a PACE program
agreement, or otherwise), the program provides
assistance to the individual in obtaining necessary
transitional care through appropriate referrals and
making the individual's medical records available to new
providers.
``(3) PACE provider defined.--
``(A) In general.--For purposes of this section, the
term `PACE provider' means an entity that--
``(i) subject to subparagraph (B), is (or is a
distinct part of) a public entity or a private,
nonprofit entity organized for charitable purposes
under section 501(c)(3) of the Internal Revenue
Code of 1986; and
``(ii) has entered into a PACE program
agreement with respect to its operation of a PACE
program.
``(B) Treatment of private, for-profit providers.--
Clause (i) of subparagraph (A) shall not apply--
``(i) to entities subject to a demonstration
project waiver under subsection (h); and
``(ii) after the date the report under section
4804(b) of the Balanced Budget Act of 1997 is
submitted, unless the Secretary determines that
any of the findings described in subparagraph (A),
(B), (C), or (D) of paragraph (2) of such section
are true.
``(4) PACE program agreement defined.--For purposes of this
section, the term `PACE program agreement' means, with respect
to a PACE provider, an agreement, consistent with this section,
section 1934 (if applicable), and regulations promulgated to
carry out such sections, between the PACE provider and the
Secretary, or an agreement between the PACE provider and a State
administering agency for the operation of a PACE program by the
provider under such sections.
``(5) PACE program eligible individual defined.--For
purposes of this section, the term `PACE program eligible
individual' means, with respect to a PACE program, an individual
who--
``(A) is 55 years of age or older;
``(B) subject to subsection (c)(4), is determined
under subsection (c) to require the level of care
required under the State medicaid plan for coverage of
nursing facility services;
``(C) resides in the service area of the PACE
program; and
[[Page 111 STAT. 530]]
``(D) meets such other eligibility conditions as may
be imposed under the PACE program agreement for the
program under subsection (e)(2)(A)(ii).
``(6) PACE protocol.--For purposes of this section, the term
`PACE protocol' means the Protocol for the Program of All-
inclusive Care for the Elderly (PACE), as published by On Lok,
Inc., as of April 14, 1995, or any successor protocol that may
be agreed upon between the Secretary and On Lok, Inc.
``(7) PACE demonstration waiver program defined.--For
purposes of this section, the term `PACE demonstration waiver
program' means a demonstration program under either of the
following sections (as in effect before the date of their
repeal):
``(A) Section 603(c) of the Social Security
Amendments of 1983 (Public Law 98-21), as extended by
section 9220 of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (Public Law 99-272).
``(B) Section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986 (Public Law 99-509).
``(8) State administering agency defined.--For purposes of
this section, the term `State administering agency' means, with
respect to the operation of a PACE program in a State, the
agency of that State (which may be the single agency responsible
for administration of the State plan under title XIX in the
State) responsible for administering PACE program agreements
under this section and section 1934 in the State.
``(9) Trial period defined.--
``(A) In general.--For purposes of this section, the
term `trial period' means, with respect to a PACE
program operated by a PACE provider under a PACE program
agreement, the first 3 contract years under such
agreement with respect to such program.
``(B) Treatment <<NOTE: Contracts.>> of entities
previously operating pace demonstration waiver
programs.--Each contract year (including a year
occurring before the effective date of this section)
during which an entity has operated a PACE demonstration
waiver program shall be counted under subparagraph (A)
as a contract year during which the entity operated a
PACE program as a PACE provider under a PACE program
agreement.
``(10) Regulations.--For purposes of this section, the term
`regulations' refers to interim final or final regulations
promulgated under subsection (f) to carry out this section and
section 1934.
``(b) Scope of Benefits; Beneficiary Safeguards.--
``(1) In general.--Under a PACE program agreement, a PACE
provider shall--
``(A) provide to PACE program eligible individuals
enrolled with the provider, regardless of source of
payment and directly or under contracts with other
entities, at a minimum--
``(i) all items and services covered under
this title (for individuals enrolled under this
section) and all items and services covered under
title XIX, but without any limitation or condition
as to amount, duration,
[[Page 111 STAT. 531]]
or scope and without application of deductibles,
copayments, coinsurance, or other cost-sharing
that would otherwise apply under this title or
such title, respectively; and
``(ii) all additional items and services
specified in regulations, based upon those
required under the PACE protocol;
``(B) provide such enrollees access to necessary
covered items and services 24 hours per day, every day
of the year;
``(C) provide services to such enrollees through a
comprehensive, multidisciplinary health and social
services delivery system which integrates acute and
long-term care services pursuant to regulations; and
``(D) specify the covered items and services that
will not be provided directly by the entity, and to
arrange for delivery of those items and services through
contracts meeting the requirements of regulations.
``(2) Quality assurance; patient safeguards.--The PACE
program agreement shall require the PACE provider to have in
effect at a minimum--
``(A) a written plan of quality assurance and
improvement, and procedures implementing such plan, in
accordance with regulations; and
``(B) written safeguards of the rights of enrolled
participants (including a patient bill of rights and
procedures for grievances and appeals) in accordance
with regulations and with other requirements of this
title and Federal and State law that are designed for
the protection of patients.
``(c) Eligibility Determinations.--
``(1) In general.--The determination of whether an
individual is a PACE program eligible individual--
``(A) shall be made under and in accordance with the
PACE program agreement; and
``(B) who is entitled to medical assistance under
title XIX, shall be made (or who is not so entitled, may
be made) by the State administering agency.
``(2) Condition.--An individual is not a PACE program
eligible individual (with respect to payment under this section)
unless the individual's health status has been determined by the
Secretary or the State administering agency, in accordance with
regulations, to be comparable to the health status of
individuals who have participated in the PACE demonstration
waiver programs. Such determination shall be based upon
information on health status and related indicators (such as
medical diagnoses and measures of activities of daily living,
instrumental activities of daily living, and cognitive
impairment) that are part of a uniform minimum data set
collected by PACE providers on potential PACE program eligible
individuals.
``(3) Annual eligibility recertifications.--
``(A) In general.--Subject to subparagraph (B), the
determination described in subsection (a)(5)(B) for an
individual shall be reevaluated at least annually.
``(B) Exception.--The requirement of annual
reevaluation under subparagraph (A) may be waived during
a period in accordance with regulations in those cases
where the
[[Page 111 STAT. 532]]
State administering agency determines that there is no
reasonable expectation of improvement or significant
change in an individual's condition during the period
because of the severity of chronic condition, or degree
of impairment of functional capacity of the individual
involved.
``(4) Continuation of eligibility.--An individual who is a
PACE program eligible individual may be deemed to continue to be
such an individual notwithstanding a determination that the
individual no longer meets the requirement of subsection
(a)(5)(B) if, in accordance with regulations, in the absence of
continued coverage under a PACE program the individual
reasonably would be expected to meet such requirement within the
succeeding 6-month period.
``(5) Enrollment; disenrollment.--
``(A) Voluntary disenrollment at any time.--The
enrollment and disenrollment of PACE program eligible
individuals in a PACE program shall be pursuant to
regulations and the PACE program agreement and shall
permit enrollees to voluntarily disenroll without cause
at any time.
``(B) Limitations on disenrollment.--
``(i) In general.--Regulations promulgated by
the Secretary under this section and section 1934,
and the PACE program agreement, shall provide that
the PACE program may not disenroll a PACE program
eligible individual except--
``(I) for nonpayment of premiums (if
applicable) on a timely basis; or
``(II) for engaging in disruptive or
threatening behavior, as defined in such
regulations (developed in close
consultation with State administering
agencies).
``(ii) No disenrollment for noncompliant
behavior.--Except as allowed under regulations
promulgated to carry out clause (i)(II), a PACE
program may not disenroll a PACE program eligible
individual on the ground that the individual has
engaged in noncompliant behavior if such behavior
is related to a mental or physical condition of
the individual. For purposes of the preceding
sentence, the term `noncompliant behavior'
includes repeated noncompliance with medical
advice and repeated failure to appear for
appointments.
``(iii) Timely review of proposed nonvoluntary
disenrollment.--A proposed disenrollment, other
than a voluntary disenrollment, shall be subject
to timely review and final determination by the
Secretary or by the State administering agency (as
applicable), prior to the proposed disenrollment
becoming effective.
``(d) Payments to PACE Providers on a Capitated Basis.--
``(1) In general.--In the case of a PACE provider with a
PACE program agreement under this section, except as provided in
this subsection or by regulations, the Secretary shall make
prospective monthly payments of a capitation amount for each
PACE program eligible individual enrolled under the agreement
under this section in the same manner and from the same sources
as payments are made to a Medicare+Choice
[[Page 111 STAT. 533]]
organization under section 1853 (or, for periods beginning
before January 1, 1999, to an eligible organization under a
risk-sharing contract under section 1876). Such payments shall
be subject to adjustment in the manner described in section
1853(a)(2) or section 1876(a)(1)(E), as the case may be.
``(2) Capitation amount.--The capitation amount to be
applied under this subsection for a provider for a contract year
shall be an amount specified in the PACE program agreement for
the year. Such amount shall be based upon payment rates
established for purposes of payment under section 1853 (or, for
periods before January 1, 1999, for purposes of risk-sharing
contracts under section 1876) and shall be adjusted to take into
account the comparative frailty of PACE enrollees and such other
factors as the Secretary determines to be appropriate. Such
amount under such an agreement shall be computed in a manner so
that the total payment level for all PACE program eligible
individuals enrolled under a program is less than the projected
payment under this title for a comparable population not
enrolled under a PACE program.
``(e) PACE Program Agreement.--
``(1) Requirement.--
``(A) In general.--The <<NOTE: Procedures.>>
Secretary, in close cooperation with the State
administering agency, shall establish procedures for
entering into, extending, and terminating PACE program
agreements for the operation of PACE programs by
entities that meet the requirements for a PACE provider
under this section, section 1934, and regulations.
``(B) Numerical limitation.--
``(i) In general.--The Secretary shall not
permit the number of PACE providers with which
agreements are in effect under this section or
under section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986 to exceed--
``(I) 40 as of the date of the
enactment of this section; or
``(II) as of each succeeding
anniversary of such date, the numerical
limitation under this subparagraph for
the preceding year plus 20.
Subclause (II) <<NOTE: Applicability.>> shall
apply without regard to the actual number of
agreements in effect as of a previous anniversary
date.
``(ii) Treatment of certain private, for-
profit providers.--The numerical limitation in
clause (i) shall not apply to a PACE provider
that--
``(I) is operating under a
demonstration project waiver under
subsection (h); or
``(II) was operating under such a
waiver and subsequently qualifies for
PACE provider status pursuant to
subsection (a)(3)(B)(ii).
``(2) Service area and eligibility.--
``(A) In general.--A PACE program agreement for a
PACE program--
``(i) shall designate the service area of the
program;
``(ii) may provide additional requirements for
individuals to qualify as PACE program eligible
individuals with respect to the program;
[[Page 111 STAT. 534]]
``(iii) shall be effective for a contract
year, but may be extended for additional contract
years in the absence of a notice by a party to
terminate and is subject to termination by the
Secretary and the State administering agency at
any time for cause (as provided under the
agreement);
``(iv) shall require a PACE provider to meet
all applicable State and local laws and
requirements; and
``(v) shall contain such additional terms and
conditions as the parties may agree to, so long as
such terms and conditions are consistent with this
section and regulations.
``(B) Service area overlap.--In designating a
service area under a PACE program agreement under
subparagraph (A)(i), the Secretary (in consultation with
the State administering agency) may exclude from
designation an area that is already covered under
another PACE program agreement, in order to avoid
unnecessary duplication of services and avoid impairing
the financial and service viability of an existing
program.
``(3) Data collection; <<NOTE: Records.>> development of
outcome measures.--
``(A) Data collection.--
``(i) In general.--Under a PACE program
agreement, the PACE provider shall--
``(I) collect data;
``(II) maintain, and afford the
Secretary and the State administering
agency access to, the records relating
to the program, including pertinent
financial, medical, and personnel
records; and
``(III) make <<NOTE: Reports.>>
available to the Secretary and the State
administering agency reports that the
Secretary finds (in consultation with
State administering agencies) necessary
to monitor the operation, cost, and
effectiveness of the PACE program under
this section and section 1934 .
``(ii) Requirements during trial period.--
During the first 3 years of operation of a PACE
program (either under this section or under a PACE
demonstration waiver program), the PACE provider
shall provide such additional data as the
Secretary specifies in regulations in order to
perform the oversight required under paragraph
(4)(A).
``(B) Development of outcome measures.--Under a PACE
program agreement, the PACE provider, the Secretary, and
the State administering agency shall jointly cooperate
in the development and implementation of health status
and quality of life outcome measures with respect to
PACE program eligible individuals.
``(4) Oversight.--
``(A) Annual, close oversight during trial period.--
During the trial period (as defined in subsection
(a)(9)) with respect to a PACE program operated by a
PACE provider, the Secretary (in cooperation with the
State administering agency) shall conduct a
comprehensive annual review of the operation of the PACE
program by
[[Page 111 STAT. 535]]
the provider in order to assure compliance with the
requirements of this section and regulations. Such a
review shall include--
``(i) an on-site visit to the program site;
``(ii) comprehensive assessment of a
provider's fiscal soundness;
``(iii) comprehensive assessment of the
provider's capacity to provide all PACE services
to all enrolled participants;
``(iv) detailed analysis of the entity's
substantial compliance with all significant
requirements of this section and regulations; and
``(v) any other elements the Secretary or
State administering agency considers necessary or
appropriate.
``(B) Continuing oversight.--After the trial period,
the Secretary (in cooperation with the State
administering agency) shall continue to conduct such
review of the operation of PACE providers and PACE
programs as may be appropriate, taking into account the
performance level of a provider and compliance of a
provider with all significant requirements of this
section and regulations.
``(C) Disclosure.--The <<NOTE: Public
information.>> results of reviews under this paragraph
shall be reported promptly to the PACE provider, along
with any recommendations for changes to the provider's
program, and shall be made available to the public upon
request.
``(5) Termination of pace provider agreements.--
``(A) In general.--Under regulations--
``(i) the Secretary or a State administering
agency may terminate a PACE program agreement for
cause; and
``(ii) a PACE provider may terminate an
agreement after appropriate notice to the
Secretary, the State agency, and enrollees.
``(B) Causes for termination.--In accordance with
regulations establishing procedures for termination of
PACE program agreements, the Secretary or a State
administering agency may terminate a PACE program
agreement with a PACE provider for, among other reasons,
the fact that--
``(i) the Secretary or State administering
agency determines that--
``(I) there are significant
deficiencies in the quality of care
provided to enrolled participants; or
``(II) the provider has failed to
comply substantially with conditions for
a program or provider under this section
or section 1934; and
``(ii) the entity has failed to develop and
successfully initiate, within 30 days of the date
of the receipt of written notice of such a
determination, a plan to correct the deficiencies,
or has failed to continue implementation of such a
plan.
``(C) Termination and transition procedures.--An
entity whose PACE provider agreement is terminated
[[Page 111 STAT. 536]]
under this paragraph shall implement the transition
procedures required under subsection (a)(2)(C).
``(6) Secretary's oversight; enforcement authority.--
``(A) In general.--Under regulations, if the
Secretary determines (after consultation with the State
administering agency) that a PACE provider is failing
substantially to comply with the requirements of this
section and regulations, the Secretary (and the State
administering agency) may take any or all of the
following actions:
``(i) Condition the continuation of the PACE
program agreement upon timely execution of a
corrective action plan.
``(ii) Withhold some or all further payments
under the PACE program agreement under this
section or section 1934 with respect to PACE
program services furnished by such provider until
the deficiencies have been corrected.
``(iii) Terminate such agreement.
``(B) Application of intermediate sanctions.--Under
regulations, the Secretary may provide for the
application against a PACE provider of remedies
described in section 1857(g)(2) (or, for periods before
January 1, 1999, section 1876(i)(6)(B)) or 1903(m)(5)(B)
in the case of violations by the provider of the type
described in section 1857(g)(1) (or section
1876(i)(6)(A) for such periods) or 1903(m)(5)(A),
respectively (in relation to agreements, enrollees, and
requirements under this section or section 1934,
respectively).